1) A monopolistic competitior wishing to maximize profit will select profit will

Question

1) A monopolistic competitior wishing to maximize profit will select profit will select a quantity where:

a) marginal cost equals average cost

b) marginal revenue equals marginal cost

c) marginal revenue equals average cost

d) marginal cost equals demand

2) If a firm is producing a quantity where marginal revenue exeeds marginal cots, the firm should ____existing levels of productin, in order to____.

a) expand ; decrease total costs

b) decrease; increase profitability

c) decrease ; increase total revenue

e) expand ; increase profitability

3) If a firm is producing a quantity where marginal cost exceeds marginal revenue, the firm should____exisiting levels of production, in order to_____.

a) expand ; decrease total costs

b) decrease ; increase profitability

c) expand ; increase profitability

e) decrease ; increase total revenue

Explanation / Answer

Ans:

1) a) marginal cost equals average cost

2) b) decrease; increase profitability

3) e) decrease ; increase total revenue

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