Assume that price exceeds average variable cost over the relevant range of demand
If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118, then to maximize profits the firm should increase its output.
FALSE
You might also like to view...
Assume that the central bank purchases government securities in the open market. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and reserves account in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and reserves account becomes more negative (or less positive). b. The real risk-free interest rate falls, and reserves account becomes more negative (or less positive). c. The real risk-free interest rate falls, and reserves account remain the same. d. The real risk-free interest rate rises, and reserves account remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Surpluses drive price up, while shortages drive price down
a. True b. False Indicate whether the statement is true or false