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Economics (AS & A Level) · Oct / Nov 2023 · Paper 32 · Question 5

9708Different market structures

The diagram shows the cost and revenue curves of a profit-maximising, monopolistically competitive firm in long-run equilibrium. Which statement correctly describes the performance of this firm?

  1. AIt is allocatively efficient.
  2. BIt is making abnormal losses.
  3. CIt is making abnormal profits.
  4. DIt is making normal profits.

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Correct answer: D. It is making normal profits.

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