Consider a Monopolistically Competitive Firm in a Market in Long-Run

question 214

Multiple Choice

Consider a monopolistically competitive firm in a market in long-run equilibrium. This firm is likely earning

• A)a positive economic profit since it is charging a price above marginal cost.
• B)no economic profit since it is charging a price equal to its marginal cost.
• C)a positive economic profit since it is charging a price above its average total cost.
• D)no economic profit since it is charging a price equal to it average total cost.

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Definitions:

Payroll Tax

Taxes imposed on employers or employees, based on the salary paid to employees.

Federal Personal Income Tax

A tax levied by the U.S. government on the annual income of individuals, households, and trusts.

Wages

Compensation provided to employees for their work, often determined on a per hour, per day, or per task completed basis.

Social Security Tax

Taxes levied on both employers and employees to fund the Social Security program, which provides retirement, disability, and survivor benefits.