If There Are Large Fixed Costs,due to Research and Development,perfect

question 19

Multiple Choice

If there are large fixed costs,due to research and development,perfect competition does not generate new ideas,because:

• A)firms need to recoup these costs through higher profits.
• B)with monopolistic competition,prices are equal to the marginal cost plus a markup.
• C)with monopolistic competition,prices are equal to the marginal cost minus a markup.
• D)perfectly competitive firms always set prices lower than the marginal cost.
• E)Both a and b are correct.

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