In monopolistic competition, a firm has a limited degree of "price-making" ability. This means that the firm will:
A. Always earn an economic profit
B. Set price equal to marginal cost
C. Set price above marginal cost
D. Produce at minimum average total cost
C. Set price above marginal cost
You might also like to view...
Higher protection raises the overall level of employment
Indicate whether the statement is true or false
A consumer values a car at $30,000 and a producer values the same car at $20,000 . If the transaction is completed at $24,000 . the transaction will generate:
a. No surplus b. $4,000 worth of seller surplus and unknown amount of buyer surplus c. $6,000 worth of buyer surplus and $4,000 of seller surplus d. $6,000 worth of buyer surplus and unknown amount of seller surplus
A cartel finds it difficult to act as a monopolist because the products sold by each firm in a cartel are slightly differentiated
a. True b. False Indicate whether the statement is true or false
Principal-agent problems arise due to hidden product characteristics
Indicate whether the statement is true or false