Which of the Following Statements Best Describes Firms Under Monopolistic

question 111

Multiple Choice

Which of the following statements best describes firms under monopolistic competition?

• A) Profits will be positive in the long run.
• B) Price always equals average variable cost.
• C) In the long run, positive economic profit will be eliminated.
• D) Marginal revenue equals minimum average total cost in the short run.

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Definitions:

Competitive Labor Market

A competitive labor market is characterized by numerous employers and workers where no single entity has the power to influence wages, ensuring efficient allocation of labor.

Monopsonist

A market situation where there is only one buyer for many sellers, giving the single buyer significant control over prices and terms of purchase.

Competitive Labor Market

A market scenario where numerous buyers (employers) and sellers (workers) freely interact to determine the wages and employment conditions without significant restrictions or monopoly power.

Profit-Maximizing Level

The production output level at which a business achieves the highest possible profit, where marginal cost equals marginal revenue.