The marginal revenue of a monopolistically competitive firm
A) cannot be negative because the price the firm charges will always be greater than zero.
B) can be negative if the firm charges a high price.
C) can be negative if the firm charges a low price.
D) will equal average revenue.
Answer: C
You might also like to view...
Refer to Figure 16-1. Suppose the economy is in short-run equilibrium above potential GDP and wages and prices are rising
If contractionary policy is used to move the economy back to long run equilibrium, this would be depicted as a movement from ________ using the static AD-AS model in the figure above. A) D to C B) A to E C) C to B D) B to A E) E to A
An oligopolist decides to lower its price to capture a greater market share. This sets off a price war with its rivals, and the price moves from P 1 to P 2 and so forth. What is the ultimate outcome if this price war continues?
a. The final price equals the ATC, and economic profits become zero.
b. The final price reflects the benefits of collusion between the firms.
c. Without collusion the firms are able to charge a higher price than before.
d. The final price exceeds the ATC, and economic profits are earned.