Suppose a Monopolistically Competitive Firm Can Increase Its Profits by Decreasing

question 90

Multiple Choice

Suppose a monopolistically competitive firm can increase its profits by decreasing its output.Then it must be the case that at the current output:

• A)marginal revenue is less than zero.
• B)price is less than marginal revenue.
• C)marginal revenue is less than marginal cost.
• D)price is less than average total cost.

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Definitions:

Trade-In Allowance

The amount a seller allows a buyer for a fixed asset that is traded in for a similar asset.

Commercial Substance

Commercial substance is a concept in accounting that indicates a transaction significantly changes the economic situation of the parties involved.

Trade-In Allowance

The amount a seller credits to a buyer when the buyer returns a previously purchased item as part of the payment for a new item.

Patents

Legal documents granting an inventor exclusive rights to produce, use, and sell an invention for a certain period of time.