Market structure has implications for a firm\'s profitability. Which of the foll

Question

Market structure has implications for a firm's profitability. Which of the following statements is true? a. a competitive firm maximizes profits by producing at the quantity where marginal revenue equals marginal cost b. a monopolistic firm since it faces a downward sloping demand curve can earn positive economic profits in the long run c. because it possesses significant market power, an oligopoly firm will always earn positive economic profits in the long run d. a monopolist maximizes profit by producing at the quantity where marginal revenue equals marginal cost, but a competitive firm being a price taker, must maximize revenue

Explanation / Answer

a competitive firm maximizes profits by producing at the quantity where marginal revenue equals marginal cost. The competitive firm is a price taker, charges a price =MC.

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