The Diagram Below Shows Selected Cost and Revenue Curves for a Firm

question 112

Multiple Choice

The diagram below shows selected cost and revenue curves for a firm in a monopolistically competitive industry.
FIGURE 11- 1
-An imperfectly competitive industry is often allocatively inefficient when compared to the performance of a competitive industry,because imperfect competitors

• A)make profits.
• B)operate in the global economy.
• C)set price above the marginal cost.
• D)obtain economies of scale.
• E)maximize profits.

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Definitions:

Price of Labor

The cost associated with hiring workers, often considered in terms of wages or salaries.

Marginal Product

The change in output that results from employing an additional unit of input, holding all other inputs constant.

Average Product

The output per unit of a particular input, such as labor or capital.

Optimal Production Technique

A method that contributes to the most efficient process of producing goods and services given the available resources and technology.