A Monopolistically Competitive Firm Maximizes Profits in the Short Run

question 54

Multiple Choice

A monopolistically competitive firm maximizes profits in the short run

• A)by equating MC with price.
• B)by equating MC with MR.
• C)when P = AVC.
• D)when P = ATC.
• E)by maximizing total revenue.

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Definitions:

Insurance Exchanges

Government-regulated markets for health insurance in which individuals seeking to purchase health insurance to comply with the personal mandate of the Patient Protection and Affordable Care Act (PPACA) of 2010 will be able to comparison shop among insurance policies approved by regulators. Each state will have its own exchange.

Government-set Standards

Regulations established by government bodies to ensure quality, safety, and fairness in the production, provision, or use of goods and services.

Efficiency Loss

The loss of economic efficiency that occurs when the competitive equilibrium in a market is not achieved or is distorted.

Health Insurance

An insurance policy designed to cover costs related to medical care, including surgery, prescriptions, and occasionally dental treatments for the policyholder.