A monopolistically competitive firm maximizes profit in the short ...

[nevelica]

A monopolistically competitive firm maximizes profit in the short run by producing where
 
  A) price is less than marginal revenue. B) price is greater than marginal cost.
  C) price is less than average revenue. D) price is less than marginal cost.

Question 2

You participate in a taste test for a new protein supplement called Kapow. You are given five consecutive one ounce vials of the supplement and after consuming each vial you are asked to note your reaction.
 
  You consume the first vial and your response is: Hmmm, quite good After the second, you say, Not bad at all. After the third, you note, It's alright. and after the fourth you wince, No more, the after-taste is getting to me. I need water. What economic principle does this scenario illustrate? Define the principle.

[bookworm410]

Answer to Question 1

B

Answer to Question 2

It illustrates the law of diminishing marginal utility which states that consumers experience diminishing additional satisfaction as they consume more of a good or service during a given period of time.