Answer to Question #52957 in Microeconomics for Yana

Question

MULTIPLE CHOICE
1. A monopolistic competitive firm is inefficient because the firm:
a. earns positive economic profit in the long run.
b. is producing at an output corresponding to the condition that marginal cost equals price.
c. is not maximizing its profit.
d. produces an output where average total cost is not minimum.

2. Which of the following statements best describes firms under monopolistic competition?
a. There is little price or quality competition.
b. The firms compete, using quality, location, advertising, and price.
c. Firms do not compete using advertising.
d. There is little competition between firms.

Answer 1

1. d. produces an output where average total cost is not minimum.
2. b. The firms compete, using quality, location, advertising, and price.