If we were to compare the monopolistically competitive firm's long run outcome to that of a perfectly competitive one, we would conclude that the monopolistically competitive firm:
A. earns greater profits.
B. charges less.
C. produces less.
D. creates more total surplus.
Answer: C
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Very Technical is a firm that sells computing equipment. It costs Very Technical $125 for each order of computer monitors and the variable cost of placing an order is $10 per monitor. Very Technical pays an annual holding cost of $20 per monitor. If Very Technical sells 8,000 computer monitors a year and they order 1,000 monitors, what is the total annual cost of the monitors?
A) $59,500 B) $101,000 C) $87,500 D) $91,000
Trade restrictions result in all of the following except one. Which is the exception?
a. higher prices b. fewer choices c. improved quality d. misallocation of resources e. reduced competition
If a monopolist's marginal revenue exceeds its marginal cost at its current level of output, then to maximize its profit the monopolist should:
A. do nothing. B. increase output until marginal revenue equals marginal cost. C. increase output until price equals marginal cost. D. decrease output in order to increase the gap between marginal revenue and marginal cost.
A sunk cost is one that
a. does not vary with the level of output. b. increases as the firm's production increases. c. measures the value of the firm's self-owned resources. d. can no longer be avoided.