Assume Price Exceeds Average Variable Cost Over the Relevant Range

question 192

Multiple Choice

Assume price exceeds average variable cost over the relevant range of demand.If a monopolistically competitive firm is producing at an output where marginal revenue is $23 and marginal cost is $19, then to maximise profits the firm should

• A)continue to produce the same quantity.
• B)increase output.
• C)decrease output.
• D)shut down.

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Definitions:

Bad Decision

A choice or judgment that results in undesired outcomes, often based on faulty reasoning, insufficient information, or emotional biases.

Groupthink

A phenomenon where the desire for harmony or conformity in a decision-making group leads to an incorrect or deviant decision-making outcome.

Highly Cohesive

Refers to a group that exhibits strong bonds and unity among its members, often resulting in high levels of solidarity and loyalty.

Little or No Pressure

A situation where there are minimal external forces compelling an individual to act in a particular manner, often leading to a more authentic choice or action.