In the Krugman Model with Economies of Scale and Monopolistic

Multiple Choice

In the Krugman model with economies of scale and monopolistic competition (with L =Amount of labor hired by the firm, Q = quantity of output of the firm, W = wage rate for Labor, P = price of the firm's product, and a and b are constants) , the equation that states The labor requirement of the firm is __________. In the model, the existence of zero Profits for the firm in long-run equilibrium can be stated as __________.

A) L = bQ; PQ = W(a + bQ)
B) L = bQ; PQ - (a + bQ) = 0
C) L = a + bQ; PQ = W(a + bQ)
D) L = a + bQ; PQ - (a + bQ) = 0