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​A Monopolistically Competitive Firm Is Currently Charging a Price of $10

Question 22

Multiple Choice

​A monopolistically competitive firm is currently charging a price of $10 and producing 12,000 units/month. It faces monthly fixed costs of $15,000 and has an average variable cost of $6/unit. In the long run, we would expect:


A) ​The firm to go out of business
B) ​The price will rise and output will fall
C) ​The price will fall and output will fall
D) ​The price will fall and output will rise

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