The First-Order Condition for a Firm Maximizing Its Profit Operating

question 79

Multiple Choice

The first-order condition for a firm maximizing its profit operating in a monopolistically competitive market is:

• A) (dMR/dQ) = (dMC/dQ).
• B) P − (dC(Q)/dQ) = 0.
• C) (dR(Q)/dQ) − (dC(Q)/dQ) = 0.
• D) (dMR/dQ) < (dMC/dQ).

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Definitions:

Market Economy

An economy in which decisions about production and consumption are made by individual producers and consumers.

Public Goods

Items that cannot be restricted to non-payers and whose consumption by one individual does not diminish availability to others; these are accessible to all, regardless of payment.

Positive Externalities

External benefits.

Common Resource

A type of good that is non-excludable but rivalrous, meaning it is available to everyone but its consumption by one person can limit availability to others.