A Firm in Monopolistic Competition with a Down-Sloping Demand Curve

question 147

Multiple Choice

A firm in monopolistic competition with a down-sloping demand curve

• A)does not have to worry about price competition,due to the nature of its demand curve.
• B)can use marginal analysis to help it maximize profits.
• C)will have to charge the market price,which is set by the intersection of industry supply and demand.
• D)could use marginal analysis to compare alternatives-but this would not help in pricing because this method focuses on selling one more unit and therefore ignores total profitability.
• E)could use average-cost pricing to consider a range of profitable prices.

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Definitions:

Decrease

The act of becoming smaller or fewer in size, amount, intensity, or degree; a reduction in value or quantity.

Accounts Payable

This term refers to the amounts owed by a company to suppliers or creditors for goods and services received but not yet paid for.

Sale Of Machinery

The process of transferring ownership of a piece of industrial equipment or machinery from one entity to another, usually in exchange for money.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments not considered cash equivalents.