Like a perfect competitor, a monopolistic competitor:
a. produces where price equals marginal cost.
b. produces a homogeneous product.
c. earns zero economic profit in the long run.
d. earns zero economic profit in the short run.
c
You might also like to view...
You observe that the demand for pomelo is given by Qd = 8,000-20Pand the supply of pomelo is given by Qs = 2,000 + 20P. What is the market equilibrium for pomelo?
A. P = 150, Q = 5,000 B. P = 500, Q = 16,000 C. P = 200, Q = 3,000 D. P = 50, Q = 2,500
At its current level of quantity, a perfectly competitive firm's marginal revenue is $2.50, its short-run marginal cost is $2.50 and its long-run marginal cost is $2.00. Which of the following statements is true?
A) The firm is maximizing its long-run profit, but not its short-run profit. B) The firm should decrease its production to maximize profit in the short-run. C) The firm should increase its production to maximize profit in the short-run. D) The firm is maximizing its short-run profit, but not its long-run profit.