A Monopolistically Competitive Firm Is Operating at a Short-Run Level

question 79

Multiple Choice

A monopolistically competitive firm is operating at a short-run level of output where price is $21, average total cost is $15, marginal cost is $13, and marginal revenue is $13. In the short run this firm should

• A) reduce product price.
• B) increase the level of output.
• C) decrease the level of output.
• D) make no change in the level of output.

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Definitions:

Proton Donor

A substance that releases hydrogen ions (H+) in solution, thus behaving as an acid according to the Bronsted-Lowry theory.

Neutral Substance

A chemical compound that is neither acidic nor basic and does not change the color of litmus paper.

Acid

Molecule that is a proton donor; any substance that releases hydrogen ions (H+).

Solutes

Substances dissolved in a liquid (solvent) to form a solution, such as salts in water.