In long-run equilibrium, a profit-maximizing firm in a monopolistically competitive industry will produce the quantity of output where
A. ATC < P, MR = MC = P.
B. ATC = P, MR = MC < P.
C. ATC < P, MR + MC < P.
D. ATC = P, MR = MC = P.
Answer: B
You might also like to view...
Incentives work by changing the trade-offs faced by individuals
Indicate whether the statement is true or false
The figure illustrates the market for bagels. If the number of bagels is increased from 20 to 30 an hour, consumer surplus plus producer surplus ________ and deadweight loss is ________
A) decreases; negative B) decreases; positive C) increases; positive D) increases; negative
People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power. If inflation and income grow at the same rate, is this complaint valid? Explain carefully
What will be an ideal response?
When the actual inflation rate turns out to be greater than the expected inflation rate, who gains — the borrower or the lender — and who loses? Explain why
What will be an ideal response?