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This is the end of the test. When you have completed all the questions and reviewed your answers, press the button below to grade the test. What price will the monopolistically competitive firm charge?The monopolistic competitor will produce that level of output and charge the price that is indicated by the firm's demand curve. If the firms in a monopolistically competitive industry are earning economic profits, the industry will attract entry until profits are driven down to zero in the long run.
What are two ways that a purely competitive firm can determine the level of output at which it will realize maximum profit or minimum losses?There are two complementary approaches to determining the level of output at which a competitive firm will realize maximum profits or minimum losses. The first involves a comparison of total revenue and total costs; the second, a comparison of marginal reve- nue and marginal cost.
What is the competitive firm's short run supply curve?A firm's short-run supply curve is the marginal cost curve above its average variable cost curve. It is because of the fact that a competitive firm produces at an output level where the price is equal to the marginal cost. As a result, a firm decides its production based on the marginal cost curve.
When existing firms in an industry are earning positive economic profits it signals that?10. Answer a. The firm makes positive economic profit whenever the market price is greater than the firm's average total cost, and it makes negative economic profit whenever the market price is less than the firm's average total cost. 11.
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