1. Which of the following is/are TRUE? I. A monopolistic competitive firm sets p
ID: 1220633 • Letter: 1
Question
1. Which of the following is/are TRUE?
I. A monopolistic competitive firm sets price > MC. II. A monopolistic competitive firm sets price = MC. III. A monopolistic competitive firm operates at MC = MR.
A) I only
B) II only
C) I and III only
D) II and III only (incorrect answer)
2. Which of the following is/are TRUE of monopolistic competition? I. Monopolistic competitive firms do not produce at the minimum of their average cost curves. II. Monopolistic competitive firms produce at the minimum of their average cost curves. III. Monopolistic competitive firms earn higher profits than monopolies.
A) I only
B) II only
C) I and III only
D) II and III only (incorrect answer)
3. . Firms that expect their products to be successful:
A) have more of an incentive to advertise.
B) have less of an incentive to advertise.
C) will only participate in price advertising.
D) can better signal the quality of their product if they do not advertise.
Explanation / Answer
C) I and III only
A) I only
A) have less of an incentive to advertise.
If you don't understand anything then comment, I'ill revert back on the same. :)
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