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Cecilia's Cafe Is a Monopolistic Competitor

Question 69

Multiple Choice

Cecilia's Cafe is a monopolistic competitor.If Cecilia's is currently producing at the output level at which her average total cost is minimized and the cafe is earning an economic profit,then,in the long run,output will


A) decline and average total cost will increase
B) decline and average total cost will decrease
C) remain unchanged as Cecilia's strives to minimize costs
D) increase and average total cost will be greater
E) increase and average total cost will be smaller

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