Assume That a Monopolistically Competitive Firm Faces the Following Situation

question 145

Multiple Choice

Assume that a monopolistically competitive firm faces the following situation: P = $26; output = 13,000 units; MC = $16; ATC = $22; AVC = $15; and MR = $17. Which statement BEST describes the firm's situation?

• A) The firm is minimizing its losses.
• B) The firm is earning a normal profit, indicating that the market is likely in a long-run equilibrium.
• C) The firm would maximize its profits by increasing its output.
• D) The firm would maximize its profits by decreasing its output.

---

Definitions:

Adrenaline

A hormone and neurotransmitter also known as epinephrine, released in response to stress or excitement, causing increased heart rate and energy.

SSRI

A type of antidepressant called selective serotonin reuptake inhibitor, used to treat depression by increasing serotonin levels in the brain.

Serotonin

A neurotransmitter that plays a key role in mood regulation, digestion, sleep, and other bodily functions.

Hippocampus

A region of the brain crucial for learning and memory, situated within the temporal lobes.