In the long run, a profit-maximizing monopolistically competitive firm sells at a price that is:
A. the same as in perfect competition.
B. equal to average total cost.
C. equal to marginal cost.
D. below average total cost
Answer: B
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Which of the following is the best example of a perfectly competitive market?
A) farming B) diamonds C) athletic shoes D) soft drinks E) electricity distribution
An effective agreement to divide up the market among firms selling products that are close substitutes
A) allows each firm to earn positive net revenue even though its marginal cost is greater than its marginal revenue. B) allows each firm to earn positive net revenue by preventing cooperation from reducing each firm's marginal revenue below its marginal cost. C) tends to keep each firm's price and marginal revenue above its marginal cost. D) tends to result in both higher prices and larger output.
When government action leads to inefficiency, it is known as
A) government failure. B) government as usual. C) lack of government trust. D) politics.
In a perfectly competitive market that is in long-run equilibrium, a rightward shift in the market demand curve results in
A) the price falling in the short run. B) the firms' economic profits falling in the short run. C) firms leaving the industry in the long run. D) none of the events listed above.