The ability to set a price greater than marginal cost guarantees ...

[CORALGRILL2014]

The ability to set a price greater than marginal cost guarantees an economic profit for the monopolistic competitor (assuming P > AC).
 
  Indicate whether the statement is true or false

Question 2

The marginal expenditure of a monopsonist is 4. The wage it currently pays is 3. The labor supply curve has a constant elasticity. What is the elasticity of the labor supply?
 
  A) 0.33
  B) 0.66
  C) 1
  D) 3

[wfdfwc23]

Answer to Question 1

False. Although the firm is a price setter entry in the long run will drive price down until no economic profit exists.

Answer to Question 2

A

[CORALGRILL2014]

Excellent

[amcvicar]

TYSM