Two Firms, Firm a and Firm B, Have Identical Cost

question 159

Multiple Choice

Two firms, firm A and firm B, have identical cost curves.Firm A operates in perfect competition and firm B operates in monopolistic competition.In the long run, what can we say about the price and output that each firm charges?

• A)Firm A's price will be lower than firm B's price, and firm A's output will be lower than firm B's output.
• B)Firm A's price will be greater than firm B's price, and firm A's output will be greater than firm B's output.
• C)Firm A's price will be greater than firm B's price, and firm A's output will be lower than firm B's output.
• D)Firm A's price will be lower than firm B's price, and firm A's output will be greater than firm B's output.

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Definitions:

Directional Hypothesis

A hypothesis that specifies the expected direction of the relationship between variables, indicating an increase or decrease.

Null Hypothesis

A statement that indicates no effect or no difference, and is the hypothesis that researchers seek to nullify or disprove through statistical analysis.

Alternative Hypothesis

An assumption that suggests there is a significant difference or effect, contrary to the null hypothesis.

Directional Hypothesis

A hypothesis that specifies the direction of the expected relationship between variables, indicating how one variable will affect another.