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In the short run, a firm operating in a monopolistically competitive market

A. Produces an output level where marginal revenue equals average total cost.       

B. Sets price equal to demand where marginal revenue equals marginal cost.          

C. Must earn zero economic profits.  

D. Maximizes revenues as well as profits.

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Mahe Alam
Mahe AlamLv10
10 Sep 2020
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Related questions

32. Which of the following is not a difference between monopolies and perfectly competitive markets?

A. Monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves.

B. Monopolies charge a price higher than marginal cost while perfectly competitive firms charge a price equal to marginal cost.

C. Monopolies can earn profits in the long run while perfectly competitive firms break even.

D. Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not.

40. Which of the following statements is not correct?

A. Both monopolies and monopolistically competitive firms can earn economic profits in the long run.

B. Both monopolistically competitive and perfectly competitive firms can earn economic profits in the short run.

C. Only competitive firms produce the welfare-maximizing level of output.

D. Firms in perfect competition, monopolistic competition, and monopoly maximize profits by producing where marginal revenue equals marginal cost.

43. A monopolistically competitive firm is currently producing 20 units of output. At this level of output the firm is charging a price equal to $20, has marginal revenue equal to $12, has marginal cost equal to $12, and has average total cost equal to $18. From this information we can infer that

A. the profits of the firm are negative.

B. firms are likely to leave this market in the long run.

C. the firm is currently maximizing its profit.

D. All of the above are correct.

A monopolistic competitive firm maximizes profits by producing at the point where:

a) total revenue is at a maximum.

b) marginal revenue equals average cost.

c) marginal revenue equals marginal cost.

d) price equals marginal revenue.

e) b and d

A monopolist maximizes profits by:

A. By producing an output level where marginal cost is equal to marginal revenue. 

B. Charging a price equal to marginal revenue and marginal cost. 

C. Charging a price where marginal cost equals average total cost. 

D. Both a and b are correct.

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