In the Short Run, the Monopolistic Competitor Is Just Like

question 81

Multiple Choice

In the short run, the monopolistic competitor is just like the perfect competitor in that

• A) equilibrium is determined by setting price equal to marginal cost.
• B) either type of firm can earn economic profits, experience economic losses, or break even in the short run.
• C) each equates marginal revenue and marginal cost in order to maximize profits, with the result that price exceeds marginal revenue.
• D) new firms enter in the short run when firms are making profits.

---

Definitions:

Diminishing Returns

A rule that asserts when one input in the production process is augmented without changes to the others, there will ultimately be a decline in output after reaching a specific level.

Average Fixed Cost

The cost per unit that remains constant regardless of the level of production or output.

Output

The total amount of goods or services produced by a company or economy.

Total Cost

The total expense incurred in the production of goods or services, including both fixed and variable costs.