Comment on the following statement. Monopolistically competitive ...

[swpotter12]

Comment on the following statement. Monopolistically competitive firms will still produce in the short run even if the demand curve is below their average variable cost curve because the firms still maintain a degree of market power.
 
  What will be an ideal response?

Question 2

Today, the United States charges an average tariff rate
 
  A) which is greater than any other high-income country.
  B) that is more than its average tariff rate in 1930.
  C) of less than 1.5 percent.
  D) that exceeds 50 percent.

[nhea]

Answer to Question 1

This statement is false. If the demand curve lies below the average variable cost curve then monopolistically competitive firms, like any other firms, will find it in their interest to shut down in the short run since this will minimize losses. Market power has no bearing on the decision to shut down or remain in production.

Answer to Question 2

C

[swpotter12]

Gracias!

[yeungji]

Thanks for the timely response, appreciate it