Exhibit 10-2 a Monopolistic Competitive Firm

question 17

Multiple Choice

Exhibit 10-2 A monopolistic competitive firm

Comparing the monopolistically competitive firm in Exhibit 10-2 to the long-run profit-maximizing outcome for a perfectly competitive firm with a price of $15 per unit and a quantity of 600,

• A) the quantity produced by the monopolistically competitive firm is higher than that of the perfectly competitive firm.
• B) the profit earned by the monopolistically competitive firm is higher than that of the perfectly competitive firm.
• C) the marginal revenue of the monopolistically competitive firm is lower than that of the perfectly competitive firm at the profit-maximizing quantity.
• D) the long run average cost of the monopolistically competitive firm is higher than that of the perfectly competitive firm at the profit-maximizing quantity.

---

Definitions:

Rationality

The quality of being based on or in accordance with reason or logic, often applied to thought processes and decision-making.

True Beliefs

Convictions or acceptances that are in accordance with reality or facts.

Coherent

The quality of being logical and consistent.

Rationalists

Philosophers who believe that the primary source of knowledge is reason and logical analysis, rather than sensory experiences.