A monopolistically competitive firm maximizes profits when it
A) produces the quantity at which marginal cost equals the market price.
B) produces the quantity at which marginal cost equals marginal revenue and uses the demand curve to determine the market price.
C) produces the quantity at which marginal cost equals marginal revenue and sets the price equal to the marginal cost.
D) produces the quantity at which marginal cost equals marginal revenue and sets the price equal to the marginal revenue.
Answer: B
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If the proportion of GDP that people choose to hold in the form of money balances is 0.25, then a $100 increase in the money supply will lead to a rightward shift in the LM curve in the amount of
A) $400. B) $ 25. C) $ 75. D) $100.
Which of the following represents a good example of an oligopoly?
A) the agriculture industry B) a public utility C) the automobile industry D) the restaurant industry