Asked by Jared Myers on May 28, 2024
Verified
Which statement is TRUE?
A) For choosing the profit-maximizing quantity,the short-run decision-making process of a firm in perfect competition is the same as that of a firm in monopolistic competition since they produce so that P > MC.
B) In the long run in perfect competition,economic profits equal zero,and in monopolistic competition in the long run,economic profits are very large.
C) In perfect competition,P = MC,and in monopolistic competition,MR = MC,but P > MC and there is excess capacity.
D) In both perfect competition and monopolistic competition,P equals minimum average total cost in the long run.
Profit-Maximizing Quantity
The level of production at which a company can achieve the highest possible profit, balancing additional costs against additional revenues.
Perfect Competition
A theoretical market structure characterized by many buyers and sellers, homogenous products, and no barriers to entry or exit, leading to optimal distribution of resources.
- Understand the application of the profit-maximization criterion (MR = MC) within firms operating in monopolistic competition markets.
- Comprehend the principles of monopolistic competition and distinguish how it varies from ideal competition.
Verified Answer
Learning Objectives
- Understand the application of the profit-maximization criterion (MR = MC) within firms operating in monopolistic competition markets.
- Comprehend the principles of monopolistic competition and distinguish how it varies from ideal competition.
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