Figure 8.3 shows demands and costs for a monopolistically competitive firm. When the firm's demand curve shifts from D1 to D2 and to D3:
A. the firm's economic profit remains the same.
B. the firm's marginal revenue at the profit-maximizing output level is decreasing.
C. the firm's marginal cost at the profit-maximizing output level is increasing.
D. the firm's average cost at the profit-maximizing output level is decreasing.
Answer: C
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If society produces at a point inside the production possibilities frontier, it is characterized by full employment of resources.
Answer the following statement true (T) or false (F)
Which market structure is characterized by the following characteristics? i. A large number of firms compete. ii. Each firm produces a differentiated product. iii. Firms are free to enter and exit
A) perfect competition B) duopoly C) oligopoly D) monopolistic competition E) monopoly
Use the following two statements to answer this question: I. The price elasticity of demand is constant along the entire length of a linear demand curve. II
The price elasticity of demand is the special name that economists give to the slope of a demand curve. A) I and II are true. B) I is true, and II is false. C) I is false, and II is true. D) I and II are false.
When compared to the profit-maximizing price and quantity supplied, an average-cost pricing policy for a natural monopoly causes the price the monopolist charges to ________ and the quantity it sells to ________.
A. increase; decrease B. decrease; decrease C. decrease; increase D. increase; increase