In a monopolistically competitive industry, firms set price
a. equal to marginal cost since each firm is a price taker.
b. below marginal cost since each firm is a price taker.
c. above marginal cost since each firm is a price setter.
d. always a fraction of marginal cost since each firm is a price setter.
c
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The real business cycle school of thought is generally viewed as controversial because
A) it blames unemployment on immigration. B) it contradicts classical economic thought. C) critics find it difficult to understand how many of the post-World War II recessions could be explained by adverse changes in technology. D) all of the above.
In the money market, if the price level rises, then the demand for money ________ and the equilibrium nominal interest rate ________
A) increases; rises B) increases; falls C) decreases; rises D) increases; does not change E) decreases; falls