Author Question: Since the firm in the above figure is operating in a monopolistically competitive industry, in the ... (Read 124 times)

mp14 · **on:** Jun 29, 2018

Since the firm in the above figure is operating in a monopolistically competitive industry, in the long run we can expect to see

A) the typical firm's economic profits expand as production becomes more efficient.
B) more firms entering the industry until economic profits are zero.
C) the typical firm producing at the minimum point on its ATC curve.
D) each firm expand its share of the total market.

Question 2

The long-run aggregate supply curve is vertical at 10 trillion, but the short-run aggregate supply curve intersects the aggregate demand curve at 12 trillion. From this, we know that

A) the economy is operating below full capacity in the short run, and will have to adjust by hiring more workers, thus reducing unemployment.
B) the price level is too high. The only way long-run equilibrium can be restored is to lower the price level.
C) adjustments will have to occur so that the long-run aggregate supply equals 12 trillion.
D) adjustments will have to occur so that the short-run aggregate supply intersects the aggregate demand curve at 10 trillion.

heinisk01 · **Reply #1 on:** Jun 29, 2018

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