In the Short Run, a Monopolistically Competitive Firm Produces at the Optimal

question 164

Multiple Choice

In the short run, a monopolistically competitive firm produces at the optimal level of output and is earning positive economic profits.Which of the following must be true for this firm?

• A)MR = MC and P = ATC.
• B)MR = MC and P > ATC.
• C)MR > MC and P = ATC.
• D)P = MR = MC > ATC.

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Definitions:

Market Rate

The current price or cost of a good, service, or financial asset in the marketplace, determined by supply and demand dynamics.

Par Value

The nominal dollar amount assigned to a security by the issuer.

Semiannual Interest

Interest that is calculated and paid twice a year, often associated with bonds or loans.

Selling Price

The amount of money charged for a product or service, determined by various factors including cost, demand, and market conditions.