In the Long Run, a Monopolistically Competitive Firm Will Not

question 104

Multiple Choice

In the long run, a monopolistically competitive firm will not produce at the output level that minimizes average cost because:​

• A)MC is less than MR at that output level.
• B)MC is greater than MR at that output level.
• C)Price is greater than MR at that output level.
• D)demand is horizontal.
• E)that would leave the firm with excess capacity.

Understand firm shutdown conditions and the role of fixed and variable costs.

Comprehend the concept and calculation of short-run profits and losses in competitive markets.

Identify the conditions under which firms will earn zero, positive, or negative economic profits.

Recognize the significance of the market supply curve and its relation to individual firm supply in a competitive market.

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Definitions:

Courtesy

The demonstration of politeness, respect, and consideration for others.

Turnover

The rate at which employees leave an organization and are replaced by new employees, affecting the stability and continuity of the business.

Shocks

Unexpected or sudden events that disrupt or change the status quo, often necessitating swift adaptation or response.

Turnover

The rate at which employees leave a company and are replaced by new ones, affecting stability and continuity.