Exhibit 9-2 A monopolistic competitive firm
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If all firms in a monopolistic competitive industry have demand and cost curves like those shown in Exhibit 9-2, we would expect that in the long run:
A. all firms will leave the industry.
B. some firms will leave the industry.
C. firms in the industry earn zero economic profits.
D. a number of new firms will enter the industry.
Answer: C
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A monopolistically competitive industry is like a purely competitive industry in that
A. each industry produces a standardized product. B. nonprice competition is a feature in both industries. C. firms in both industries face a horizontal demand curve. D. neither industry has significant barriers to entry.
Payment to the owners of natural resources used in the production process is in the form of
a. interest. b. rent. c. wages. d. profits.
The arguments that the Obama administration used to justify the stimulus plan are
A. consistent with the discussion of politically-motivated actions taken by the powerful. B. consistent with the theory expressed in the chapter's discussion of discretionary fiscal policy. C. consistent with the discussion of expansionary bias. D. inconsistent with the theory expressed in the chapter's discussion of discretionary fiscal policy.
Economists who believe that the 1995-2012 rise in the average rate of productivity growth may be long lasting claim that the above-normal economic growth in the United States between 1995 and 2012 was caused by:
A. increases in the rate of personal saving. B. increased entrepreneurial activity, application of information technology, and global competition. C. rising federal budget surpluses that reduced real interest rates. D. expansionary monetary policy.