Which of the following describes the relative positions of the demand curve and the average total cost (ATC) curve of a monopolistically competitive firm that earns a profit in the short run?
A) In the short run, the firm's demand curve will lie above its ATC curve. The demand curve will be tangent to the ATC curve in the long run.
B) In the short run, the firm's demand curve will lie below its ATC curve. The demand curve will be tangent to the ATC curve in the long run.
C) In the short run, the firm's ATC curve will cross the demand curve at the profit maximizing level of output. The demand curve will be tangent to the ATC curve in the long run.
D) In the short run, the firm's demand curve will cross its ATC curve at the ATC curve's lowest point. The demand curve will be above the ATC curve in the long run.
A
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Reserve requirements are changed
A) more frequently than the discount rate is changed, but less frequently than open market operations are conducted. B) more frequently than the discount rate is changed and more frequently than open market operations are conducted. C) more frequently than open market operations are conducted, but less frequently than the discount rate is changed. D) less frequently than open market operations are conducted and less frequently than the discount rate is changed.
The profit maximizing behavior of a monopoly is different from that of a perfectly competitive firm in that a monopoly can
A) only choose the desired output, while a competitive firm can control only price. B) only choose the desired price, while a competitive firm can control only output. C) control the position of its demand schedule, but a competitive firm cannot. D) control the desired price and output to maximize profits, but a perfectly competitive firm can only choose the desired output.