Cecilia's Cafe is a monopolistic competitor. If Cecilia's is currently producing at the output level at which her average total cost is minimized and the cafe is earning an economic profit, then, in the long run, output will
a. decline and average total cost will increase
b. decline and average total cost will decrease
c. remain unchanged as Cecilia's strives to minimize costs
d. increase and average total cost will be greater
e. increase and average total cost will be smaller
A
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How would economists interpret the following facts? Fact: Over the past two decades the relative price of new textbooks has risen dramatically. Another fact: Record numbers of new textbooks have been purchased by students over the past two decades
A) The law of demand has been violated. B) The law of supply has been violated. C) The supply and demand process in new textbooks hasn't worked correctly. D) The demand for textbooks has increased. E) The facts aren't true.
Which of the following is an example of intraindustry trade?
A) Trading peanut oil for tractors B) Trading crude oil for automobiles C) Trading Nokia smartphones for Apple iPhones D) Trading jeans for cotton