11. Refer to the above diagram for a monopolistically competitive firm. If more firms would enter the industry

and product differentiation would weaken:
A. resource misallocation would become more severe.
B. the demand curve would become more elastic.
C. equilibrium output would decline and equilibrium price would rise.
D. equilibrium output would decline and equilibrium price would fall.
41. Suppose a firm anticipates that a R&D expenditure of $100 million will result in a new production process that will reduce costs
and thus create a one-time added profit of $112 million a year later. The firm's expected rate of return is:
A. 0.12 percent.
B. 112 percent.
C. 12 percent.
D. 2 percent.
43. Suppose that a firm's legal staff concludes that a new product that a firm is developing is patentable. Graphically, this new
information would shift the firm's expected rate of return curve on R&D to the:
A. right and reduce its optimal amount of R&D.
B. left and increase its optimal amount of R&D.
C. right and increase its optimal amount of R&D.
D. left and reduce its optimal amount of R&D

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