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Answer to Question #52959 in Microeconomics for Yana

Question #52959
MULTIPLE CHOICE
1. Which of the following statements best describes firms under monopolistic competition?
a. Profits will be positive in the long run.
b. Price always equals average variable cost.
c. In the long run, positive economic profit will be eliminated.
d. Marginal revenue equals minimum average total cost in the short run.
2. A monopolistic competitive firm is inefficient because the firm:
a. is not maximizing its profit.
b. is producing at an output where average total cost is not minimum.
c. earns positive economic profit in the long run.
d. none of these.
3. Which of the following is true for a firm operating under perfect competition, monopolistic
competition, and monopoly?
a. Firms earn positive economic profits in the long run.
b. Firms earn zero economic profits in the long run.
c. Profits are maximized when marginal cost equals marginal revenue.
d. Price equals marginal cost.
Expert's answer
1. Which of the following statements best describes firms under monopolisticcompetition?
c. In the long run, positive economic profit will be eliminated.
2. A monopolistic competitive firm is inefficient because the firm:
d. none of these.
3. Which of the following is true for a firm operating under perfectcompetition, monopolistic competition, and monopoly?
c. Profits are maximized when marginal cost equals marginal revenue.

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