In the long run, a monopolistically competitive firm will set price:
A. at the intersection of the marginal cost and demand curves.
B. at the intersection of the average total cost and demand curves.
C. higher than the competitive level, but lower than the monopoly price.
D. higher than the marginal cost, but lower than average total cost.
Answer: C
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The WaveHouse on Mission Beach in San Diego features the Bruticus Maximus, a ten foot wave, which tests the skills of even the most talented surf and wake board riders on the planet
WaveHouse is the only place in San Diego where this service is offered. You can ride B. Max for $40 for the first hour, $33 for the second hour, and $26 for the third hour. Why would WaveHouse charge different prices for each subsequent hour of riding? A) to capture consumer surplus among groups of buyers B) to capture consumer surplus among units of a good C) to create customer loyalty D) to encourage skill development