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johndoris johndoris
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A year ago

The diagram below shows demand and cost curves for a monopolistically competitive firm.

Short description: A graph plots output against dollars per unit. Long description: The horizontal axis representing output lists the following values from left to right: Q subscript 1 and Q subscript 2. The vertical axis representing dollars per unit lists the following values from top to bottom: P subscript 1 and P subscript 2. The graph plots two lines and two curves. The curve, LRAC passes through the following points: (Q subscript 1, P subscript 1) and (Q subscript 2, P subscript 2). The graph plots two curves and two lines. The curve, MC passes through the point, (Q subscript 2, P subscript 2). The line demand passes through the following points: (Q subscript 1, P subscript 1). The line, MR is decreasing. The two curves intersect at E subscript 2 (Q subscript 2, P subscript 2). The curve, LRAC intersects the line, Demand at point E subscript 1 (Q subscript 1, P subscript 1). The curve, MC intersects the line, D and line, MR.

FIGURE 11-4

Refer to Figure 11-4. If a decrease in industry demand led to an inward shift of each firm's demand curve, a typical firm would



▸ be making losses and some firms would exit the industry in the long run.

▸ be making profits and new firms would enter the industry in the long run.

▸ exit the industry and the industry would shut down.

▸ decrease costs in order to break even at PL and QL in the long run.

▸ increase costs in order to break even at PL and QL in the long run.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
Author:
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isaw09isaw09
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A year ago
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johndoris Author
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