A Monopolistic Competitor Maximizes Short-Run Profits By

question 74

Multiple Choice

A monopolistic competitor maximizes short-run profits by:

• A)setting price equal to marginal cost
• B)equating demand and average revenue
• C)finding the price that equates average revenue to marginal cost
• D)finding the quantity of output that equates marginal revenue and marginal cost
• E)setting price equal to average cost

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Definitions:

Standard Cost

A predetermined cost of manufacturing, servicing, or marketing an item, which is often used for budgeting and performance evaluation.

Income Statement

A financial statement showing a company's revenue and expenses, indicating the net profit or loss over a specific period.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not vary with the level of production, such as salaries of managers and depreciation of equipment.

Direct Labor

The cost associated with employees who directly contribute to the manufacturing or production of goods, redefined as the labor directly tied to the creation of a product.