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Figure 104 Figure 10

Question 2

Multiple Choice

Figure 10.4 Figure 10.4 Figure 10.4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. -Refer to Figure 10.4.Should the firm represented in the diagram continue to stay in business despite its losses? A) No, it should shut down. B) Yes, its total revenue covers its variable cost. C) No, it is not able to cover its fixed cost. D) Yes, it should increase its revenue by raising its price. Figure 10.4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 10.4.Should the firm represented in the diagram continue to stay in business despite its losses?


A) No, it should shut down.
B) Yes, its total revenue covers its variable cost.
C) No, it is not able to cover its fixed cost.
D) Yes, it should increase its revenue by raising its price.

Correct Answer:

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