Author Question: How is a monopolistically competitive firm similar to a monopoly firm? A) Both produce where ... (Read 121 times)

karateprodigy · **on:** Jun 29, 2018

How is a monopolistically competitive firm similar to a monopoly firm?

A) Both produce where marginal revenue equals marginal cost.
B) Both will observe entry into the industry if economic profit is positive.
C) Both produce a unique good.
D) Both produce where price equals marginal cost.

Question 2

In the scenario above, if both firms cheat on the agreement, producing more than the agreed amount, then

A) each firm makes zero economic profit.
B) the outcome is identical to a monopoly.
C) the industry's economic profit is the maximum profit that can be made by the duopoly.
D) each firm makes a greater economic profit than it would make if it complied with the agreement.