In the short run, firms in monopolistically competitive markets
A. produce the output level where marginal revenue equals marginal cost.
B. can earn economic profits.
C. face a downward-sloping demand curve.
D. All of these responses are correct.
Answer: D
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A firm's fixed cost divided by its level of output is equal to its:
A. variable cost. B. start-up cost. C. explicit cost. D. average fixed cost.
Assume that Clara purchases a combination of products Y and Z such that, after she is done spending her limited income, MUy/Py = 25 and MUz/Pz= 15. Based on the equal marginal principle, Clara
A. is maximizing her total utility. B. should have purchased less Y and less Z. C. should have purchased more Y and less Z. D. should have purchased less Y and more Z.
The goal of most business firms is to:
a) Maximize total profit. b) Maximize both total revenue and total profit at the same time. c) Produce as much output as possible. d) Maximize total revenue.
To have shadow prices you have to have:
A. opportunity costs. B. free markets. C. laws. D. money prices.