Question

Fuzzy Feet is a monopolistically competitive firm that faces the following demand schedule for its socks. The firm has a fixed cost of $10 and a constant zero marginal cost. In the long run, what is the likely outcome for Fuzzy Feet? Other firms will leave the market, making it more profitable for this firm. Fuzzy Feet will operate at its full capacity achieving it most efficient scale. More firms will enter the market but the price for the good will not change. The firm should expect the demand curve to shift to the left.

Answer 1

The correct answer to the following question will be Option D (The firm should expect the demand curve to shift to the left).

Step-by-step explanation:

• In a competitive market only at the long-run rate are going down for the company as new competitors come in the market others for the company seeking to that the profit.
• Then if business reduces its cost certain company in the industry reduce too as they make limited benefits in that industry as well as for the effect of which quantity of going down and supply, therefore, reduce so companies production curve moves to the left.

The other choice is not per the specified scenario. And the response to the above seems to be the right one.