Author Question: Which of the following statements best describes the price, output, and profit conditions of ... (Read 59 times)

melly21297 · **on:** Jun 30, 2018

Which of the following statements best describes the price, output, and profit conditions of monopolistic competition?
a. Price will equal marginal cost at the profit-maximizing level of output; profits will be positive in the long-run.
b. Price will always equal average variable cost in the short run and either profits or losses may result in the long run.
c. Marginal revenue will equal marginal cost at the short run, profit-maximizing level of output; in the long run, economic profit will be zero.
d. Marginal revenue will equal average total cost in the short run; long-run economic profits will be zero.

Question 2

Consumer equilibrium occurs where the budget line is ____ to the ____ possible indifference curve.
a. tangent; highest
b. equal; lowest
c. marginal; maximum
d. differential; highest