Refer to the above figure. Total cost for this firm equals

Suppose that in the short run firms are making economic profit in a monopolistically competitive industry. Explain what will eventually happen in the long run

In your answer make sure to discuss demand, price and the relationship between price and average total cost.

Which of the following best illustrates the problem of moral hazard?

A) a professional baseball team that consistently drafts poor players B) an individual that is hiding a pre-existing condition from a health insurance provider C) an increase in the level of one's income will lead to a decrease in demand for inferior goods D) an economic agent that engages in risky behavior once a loan contract is signed