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

question 150

Multiple Choice

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

• A)burden of the deadweight loss falls entirely on consumers
• B)burden of the deadweight loss falls entirely on producers
• C)deadweight loss is dissipated by the excess capacity
• D)market experiences a deadweight loss

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Definitions:

Loss on Disposal

The financial loss recognized when the selling price of an asset is less than its carrying amount on the balance sheet.

Operating Expenses

Expenses incurred in the normal operations of a business, including costs such as rent, salaries, and utilities, but not including cost of goods sold.

Operating Revenues

Income generated from a company's primary business activities, excluding income from investments or secondary operations.

Interest Expense

The financial liability incurred from borrowing funds that an entity faces over a predetermined period.