Assume price exceeds average variable cost over the

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22) Assume price exceeds average variable cost over the relevant range of demand. If amonopolistically competitive firm is producing at an output where marginal revenue is $23 andmarginal cost is $19, then to maximize profits the firm shouldA) continue to produce the same quantity.B) increase output.C) decrease output.D) shutdown.Answer:B
Figure 13-523)Refer to Figure 13-5.The candy store represented in the diagram is currently sellingQunits of candy at a price ofPa. Is this candy store maximizing its profit and if it is not, whatwould you recommend to the firm?a.D
24) Both monopolistically competitive firms and perfectly competitive firms maximize profitsC
25) A monopolistically competitive firm maximizes profit in the short run by producing whereD
26) A monopolistically competitive firm choosesA) both the quantity of output to produce and the price at which it will sell its output.B) the price of the product it sells but market forces determine the quantity it will be able to sell.C) the quantity of output to produce but the price of the product it sells is determined collectivelyby all firms in the industry.D) the price of the product it sells but the quantity of output to produce is agreed upon by allfirms in the industry.Answer:B
13.3What Happens to Profits in the Long Run?1) A monopolistically competitive industry that earns economic profits in the short run willB

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Term
Fall
Professor
Goss
Tags
Economics, Microeconomics, Monopolistic Competition, monopolistically competitive firm

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