How does a firm in monopolistic competition determine its price and quantity? What type of profit can it make in the short run and the long run?
What will be an ideal response?
The firm produces where its marginal cost equals its marginal revenue. Then the price is determined from the demand curve and is the highest price at which people will buy the quantity produced. The firm can make a positive economic profit, zero economic profit, or incur an economic loss in the short run. In the long run, the firm cannot make an economic profit; it can only make zero economic profit, that is, its owners make a normal profit.
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Choices that are best for the individuals that make them are choices in pursuit of
A) the social interest. B) efficiency. C) incentives. D) self-interest. E) equity.
Over very long periods, U.S. real economic growth averaged around:
A. 5 percent per year. B. 7 percent per year. C. 3 percent per year. D. 1 percent per year.