When a Profit-Maximizing Firm in a Monopolistically Competitive Market Charges

question 212

Multiple Choice

When a profit-maximizing firm in a monopolistically competitive market charges a price higher than marginal cost,

• A)the firm must be earning a positive economic profit.
• B)the firm may be incurring economic losses
• C)there is a deadweight loss to society, but it is exactly offset by the benefit of excess capacity.
• D)new firms will enter the market in the long run.

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Definitions:

Preoccupation

The state of being engrossed in thought or excessively concerned with something.

Short-Term Relationships

Temporary connections or partnerships that often last for a brief period and may have specific, limited objectives.

Collectivist Cultures

Societies that emphasize the needs and goals of the group over individual desires or ambitions.

Social Roles

Expected behaviors and responsibilities assigned to individuals based on their position or status within a social group or society.