Quiz_132 - 79 ,thefirm A B C D 79 Answer

79) If a monopolistically competitive firm breaks even, the firm
A) should expand production.
B) is earning an accounting profit and will have to pay taxes on that profit.
C) should advertise its product to stimulate demand.
D) is earning zero accounting and zero economic profit.
Answer: B
79)
Diff: 2 Page Ref: 438/438
Topic: Long - Run Equilibrium
Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to
other market conditions
AACSB: Reflective Thinking
Figure 13 - 7
Figure 13 - 7 shows short - run cost and demand curves for a monopolistically competitive firm in the market for designer
watches.
80) Refer to Figure 13 - 7. If the diagram represents a typical firm in the designer watch market, what is
likely to happen in the long run?
80)
Diff: 2 Page Ref: 438 - 439/438 - 439
Topic: Monopolistic Competition in the Long Run
Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to
other market conditions
AACSB: Analytic Skills
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