Use the above figure. For this monopolistic competitor, which of the following is INCORRECT?
A. The profit-maximizing rate of output is at E, where MR intersects MC.
B. The profit-maximizing rate of output is qe, and the profit-maximizing price is P.
C. A downward sloping marginal revenue curve that is below the demand curve.
D. The demand curve shows a direct relationship between price and quantity demanded.
Answer: D
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Indicate whether the statement is true or false
Suppose Bev's Bags makes two kinds of handbags-large and small. Bev rents an industrial space where she keeps the fabric, the industrial sewing machine, her measuring board and cutting shears, extra needles, thread and buttons, and labels. Which of the following would be considered a variable cost of this company?
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