Sheila runs an ice cream stand in a monopolistically competitive market. The figure below displays the demand curve for Sheila's firm along with other cost and revenue information. The x-axis measures the number of ice cream cones produced by Sheila's firm. Use the figure to answer the following question. Price 10 9 7+ 6 5.80 5 4.40 3.25 3 2 1.65 1 0 0 50 100 150 200 exit; increase enter; increase exit; decrease enter; decrease 250 MR 300 335 350 Quantity MC 400 450 ATC 500 550 Demand 600 Which of the following correctly describes the process to reach the long-run equilibrium in the ice cream market? Firms will ___ the ice cream market, which causes the demand for Sheila's ice cream to ___ until her profits are zero.
Sheila runs an ice cream stand in a monopolistically competitive market. The figure below displays the demand curve for Sheila's firm along with other cost and revenue information. The x-axis measures the number of ice cream cones produced by Sheila's firm. Use the figure to answer the following question. Price 10 9 7+ 6 5.80 5 4.40 3.25 3 2 1.65 1 0 0 50 100 150 200 exit; increase enter; increase exit; decrease enter; decrease 250 MR 300 335 350 Quantity MC 400 450 ATC 500 550 Demand 600 Which of the following correctly describes the process to reach the long-run equilibrium in the ice cream market? Firms will ___ the ice cream market, which causes the demand for Sheila's ice cream to ___ until her profits are zero.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:Sheila runs an ice cream stand in a monopolistically competitive market. The figure
below displays the demand curve for Sheila's firm along with other cost and revenue
information. The x-axis measures the number of ice cream cones produced by
Sheila's firm. Use the figure to answer the following question.
Price
10
9
7+
6
5.80
5
4.40
3.25
3
2
1.65
1
0
0
50
100
150
200
exit; increase
enter; increase
exit; decrease
enter; decrease
250
MR
300
335 350
Quantity
MC
400
450
ATC
500
550
Demand
600
Which of the following correctly describes the process to reach the long-run
equilibrium in the ice cream market? Firms will ___ the ice cream market, which
causes the demand for Sheila's ice cream to ___ until her profits are zero.
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