The Figure Given Below Shows the Cost and Revenue Curves

question 30

Multiple Choice

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-In a certain monopolistically competitive market that is characterized by high prices and equally high-quality merchandise, if a firm's competitors begin to successfully introduce new products that cut into the firm's market share, the firm's best counter-strategy is to:

• A)raise prices in order to increase the revenue.
• B)introduce few new products in order to meet competitors head on.
• C)reduce its advertising budget in order to save costs.
• D)ignore its competitors and hope its customers' loyalty carry it through the threat.
• E)look to the government for protection.

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