EC2106F08PS17 - Name Class Date ID A Practice Problems for...

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Name: ________________________ Class: ___________________ Date: __________ ID: A 1 Practice Problems for Ch17 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. A monopolistically competitive firm faces the following demand schedule for its product: Price ($) 1 09 8 7 6 5 4 3 2 1 Quantity 2 4 6 9 11 13 15 17 19 21 The firm has total fixed costs of $20 and a constant marginal cost of $2 per unit. The firm will maximize profit with a. 6 units of output. b. 9 units of output. c. 11 units of output. d. 13 units of output. ____ 2. As new firms enter a monopolistically competitive market, profits of existing firms a. rise, and product diversity in the market increases. b. rise, and product diversity in the market decreases. c. decline, and product diversity in the market increases. d. decline, and product diversity in the market decreases. ____ 3. Which of the following statements is correct? a. In the long run, both perfectly competitive firms and monopolistically competitive firms operate with excess capacity.
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EC2106F08PS17 - Name Class Date ID A Practice Problems for...

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