1. Panel (a) shows a profit-maximizing monopolisticallycompetitive firm that is

Question

1. Panel (a) shows a profit-maximizing monopolisticallycompetitive firm that is a. earning zero economic profit. b. likely to exit the market in the long run. c. producing its efficient scale of output. d. not maximizing its profit. 2. Which of the panels shown could illustrate the short-runsituation for a monopolistically competitive firm? a. Panel (a) b. Panel (b) c. Panel (c) d. All of the above are correct. 3. Panel (b) is consistent with a firm in a monopolisticallycompetitive market that is a. not in long-run equilibrium. b. in long-run equilibrium. c. producing its efficient scale of output. d. earning a positive economic profit. 4.Which of the panels depicts a firm in a monopolisticallycompetitive market earning positive economic profits? a. Panel (a) b. Panel (b) c. Panel (c) d. Panel (d)

Explanation / Answer

2. D 3. A 4. C

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