A firm in monopolistic competition maximizes its profit by ________
A. differentiating its good and producing the quantity at which price equals marginal revenue
B. producing the quantity at which marginal revenue equals marginal cost and then adding a markup
C. raising its price and producing so that it always has excess capacity
D. producing the quantity at which marginal cost equals marginal reve-nue and charging the highest price at which it can sell that quantity
D Figure 13.1 shows how a monopolistically competitive firm maximizes its profit.
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Entrepreneurs who earn arbitrage profit are able to do so by extracting the total consumer surplus from buyers
Indicate whether the statement is true or false
Refer to Figure 7.7. A technological improvement is best represented by:
A. a movement from point a to point b.
B. a movement from point d to point a.
C. a movement from point c to point a.
D. a movement from point c to point d.
Other things the same, the aggregate quantity of output supplied will increase if the price level
a. is lower than expected so that firms believe the relative price of their output has increased. b. is lower than expected so that firms believe the relative price of their output has decreased. c. is higher than expected so that firms believe the relative price of their output has increased. d. is higher than expected so that firms believe the relative price of their output has decreased.
If the Federal Open Market Committee decides to increase the money supply, then the Federal Reserve
a. creates dollars and uses them to purchase government bonds from the public. b. sells government bonds from its portfolio to the public. c. creates dollars and uses them to purchase various types of stocks and bonds from the public. d. sells various types of stocks and bonds from its portfolio to the public.