Suppose That a Monopolistically Competitive Firm Is in Long-Run Equilibrium

question 108

Multiple Choice

Suppose that a monopolistically competitive firm is in long-run equilibrium.The firm's demand curve is tangent to its average cost curve at Q = 25.Average cost is minimized at Q = 35, where average cost is $50.Which of the following is true?

• A)This firm maximizes profit at an output level of 25 units.
• B)This firm maximizes profit at an output level of 35 units.
• C)This firm maximizes profit at an output level less than 25 units.
• D)This firm maximizes profit at an output level greater than 35 units.
• E)There is not enough information to find the firm's profit-maximizing level of output.

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Definitions:

Objective Indicators

Quantifiable evidence that is used to measure and evaluate conditions or performance.

Cambridge-Somerville

A study or project name likely referring to a specific research or intervention program, possibly in the context of educational, sociological, or psychological research, in the Cambridge or Somerville areas.

Intervention Hypothesis

A theory proposing that an intervention or action taken in a specific context may lead to a desired outcome or effect.

Superordinate Goals

Superordinate goals refer to shared goals that necessitate cooperative effort; such goals can often help to reduce intergroup conflict.