A Price-Taking Firm and a Monopoly Firm Are Alike in That

question 175

Multiple Choice

A price-taking firm and a monopoly firm are alike in that:

• A) price equals marginal revenue for both.
• B) both maximize profits by choosing an output where marginal revenue equals marginal cost.
• C) price exceeds marginal cost at the profit-maximizing level of output for both.
• D) in the long run, both earn zero economic profits.

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Definitions:

Substitute Resources

Alternative inputs or resources that can be used in place of another in the production process.

MRP

Material Requirements Planning (MRP) is a production planning, scheduling, and inventory control system used to manage manufacturing processes.

Wage Rate

The amount of money paid to an employee per unit of time, such as hourly or yearly.

MRP

Marginal Revenue Product, which is the additional revenue generated by employing one more unit of a resource, such as labor or capital.