In the short run, the perfectly competitive firm will always earn an economic profit when

Graphically, how does a monopolistically competitive firm determine its profit-maximizing price?

A) It accepts the price set by the industry-wide forces of supply and demand. B) Graphically, it finds the place where MR = MC and charges the price directly to the left of that point. C) The firm's pricing structure is set by government regulators. D) The firm determines its profit-maximizing output and then charges the price associated with the point on its demand curve directly above that quantity.

Although monopolistically competitive markets offer consumers a wide variety of differentiated products, there may still be insufficient variety if

a. there are large fixed costs in the market. b. there are no barriers to entry in the market. c. the business-stealing externality is present in the market. d. the government does not impose regulations on the market.