Figure 13-14 Figure 13-14 Illustrates a Monopolistically Competitive Firm

Multiple Choice

Figure 13-14

Figure 13-14 illustrates a monopolistically competitive firm.
-Refer to Figure 13-14.It is possible to lower the average cost of production by expanding output beyond Q₀ to Q₁.Why wouldn't a firm expand its output to Q₁?

A) The firm wants to maximize accounting profit rather than economic profit.
B) The firm would suffer an economic loss at Q₁ while it would break even at Q₀.
C) The firm's marginal revenue would be negative at Q₁.
D) Demand is not sufficient for consumers to buy Q₁.