A picture frame company operates in a monopolistically competitive market. Its short-run equilibrium price is $80 and its ATC is $65 . It sells 100 picture frames a week. From this we can tell:
a. this firm is making a normal profit.
b. other picture frame companies will want to exit the market.
c. there are no other picture frame companies in the area.
d. economic profits are $1,500.
e. total profits are being maximized.
d
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The total revenue curve of a monopolist:
A) is positively sloped when marginal revenue is negative. B) is negatively sloped when marginal revenue is negative. C) is positively sloped when the marginal revenue curve is upward sloping. D) is negatively sloped when the marginal revenue curve is downward sloping.
The planning horizon refers to the short run, when the firm must plan how much of a variable input to apply to a fixed input
a. True b. False Indicate whether the statement is true or false
The market for a perfectly competitive industry clears at a price of $3, and the minimum average cost for all firms is $2.50 . In the long run, we would expect an increase in
a. each firm's output. b. the number of firms. c. each firm's profit. d. each firm's average cost.
What are two real-world complications with the long-run conclusion about the representative firm in the model of monopolistic competition?
What will be an ideal response?