At the Profit-Maximizing Output, Price Is Greater Than Marginal Cost

question 209

Multiple Choice

At the profit-maximizing output, price is greater than marginal cost

• A)for a monopolistically competitive firm only in the short run
• B)for a monopolistically competitive firm only in the long run
• C)for a monopolistically competitive firm in both the short run and the long run
• D)for a perfectly competitive firm only in the short run
• E)for a perfectly competitive firm only in the long run

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Definitions:

Cut the Price

To reduce the selling price of a product or service.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good changes in response to a change in its price.

Close Substitutes

Products or services that can be used in place of one another with little difference in satisfaction for the consumer, leading to a high cross-elasticity of demand.

Supply

The total amount of a good or service that is available for purchase at any given price level.