The graph depicts a monopolistically competitive firm.
Refer to the above graph representing an individual firm. In the short run, this monopolistically competitive firm will set price at:
A. $50 and produce 35 units of output.
B. $50 and produce 50 units of output.
C. $65 and produce 35 units of output.
D. $65 and produce 45 units of output.
Answer: C
You might also like to view...
Exclusion by the BLS of which of the following tends to understate the measure of unemployment in the economy?
a. children b. retired persons c. students d. people who do not want to work e. discouraged workers
Regardless of the cost structure of firms in a competitive market, in the long run
a. firms will experience rising demand for their products. b. the marginal firm will earn zero economic profit. c. firms will experience a less competitive market environment. d. exit and entry is likely to lead to a horizontal long-run supply curve.
If the wage rate increases and firms in a perfectly competitive industry are hiring labor, then
A. the firms will quit using labor. B. market supply will decrease. C. profits will increase. D. market price will decrease.
Critics of supply-side economics:
A. argue that a tax cut will increase aggregate supply by more than it increases aggregate demand. B. contend that the relationship between tax rates and economic incentives is small and of uncertain direction. C. believe that a decline in tax rates will increase tax revenues. D. point out that tax cuts enable households to substitute work for leisure.