Assume Price Exceeds Average Variable Cost Over the Relevant Range

question 161

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 maximize 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:

Market Share

The portion of a market controlled by a particular company or product, often expressed as a percentage of total sales in that market.

Mechanical

Pertaining to machines or the laws of physics that govern how machines work and are utilized.

Direct Customer Interaction

The direct communication and engagement between a business and its customers without intermediaries.

Philosophy

The study of fundamental questions about existence, knowledge, values, reason, mind, and language.