Which of the following is a characteristic shared by a perfectly ...

[luminitza]

Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?
 
  A) Each sets a price for its product that will maximize its revenue.
  B) Each maximizes profits by producing a quantity for which price equals marginal cost.
  C) Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost.
  D) Each must lower its price to sell more output.

Question 2

Explain whether each of the following is a fixed cost or a variable cost for Damian Dandridge's tattoo parlor.
 
  a. The payment he makes to buy tattoo ink.
  b. The wages he pays his employees.
  c. The 500-per-month payment he makes to advertise his shop on highway billboards.
  d. The lease payment he makes to the landlord who owns the building where his shop is located.
  e. The payment he makes on his liability insurance policy.

[dpost18]

Answer to Question 1

C

Answer to Question 2

c, d, and e are fixed costs because they do not change as the quantity of tattoos produced increases. a and b are variable costs because they increase as the quantity of tattoos produced increases. It is important to note that the time period under consideration is important. In the long run, all of these costs are variable.