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ECO 202 12: Questions & Correct Solutions (Rated A+)
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ECO 202 12: Questions & Correct Solutions (Rated A+)
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ECO 202 12: Questions & Correct Solutions (Rated A+)Which of the following characteristics is common to monopolistic competition
and perfect competition? Right Ans - Entry barriers into the industry are
low.
The key characteristics of a monopolistically competitive market structure
include Right Ans - sellers selling similar but different products
Table 13-1. What is the marginal revenue of the 3rd unit? Right Ans - $5.50
Figure 13-1. The marginal revenue from the increase in price from P0 to P1
equals Right Ans - the area (A-D)
Suppose a monopolistically competitive firm sells 25 units at a price of $10.
Calculate its marginal revenue per unit of output if it sells 5 more units of
output when it reduced its price to $9. Right Ans - $4
What is the profit-maximizing rule for a monopolistically competitive firm?
Right Ans - to produce a quantity that marginal revenue equals marginal cost
Table 13-2. What is the output (Q) that maximizes profit and what is the price
(p) charged? Right Ans - P = $50; Q = 6 cases
Figure 13-4. If the firm represented in the diagram is currently producing and
selling Qa units, what is the price charged? Right Ans - P2
Figure 13-4. What is the area that represents the loss made by the firm?
Right Ans - The area P2cdP3
Both monopolistically competitive firms and perfectly competitive firms
maximize profits Right Ans - by producing where marginal revenue equals
marginal cost
Figure 13-5. The candy store represented in the diagram is currently selling
Qa units of candy at a price of Pa. Is this candy store maximizing its profit and
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