Posted by Sammy on Tuesday, December 5, 2006 at 6:32pm.
50. In both monopolistic competition and non-price-discriminating monopoly, isn't the marginal revenue curve lies below the demand curve?
51. A monopolistically competitive firm is producing an output level where marginal revenue is greater than marginal cost. This firm should ______ quantity and ______ price to increase profit or reduce losses.
Wouldn't the answer be decrease quantity and increase price?
52. A monopolistically competitive firm is producing an output level where marginal revenue is less than marginal cost. This firm should _____ quantity and _____ price to increase profit or reduce loss.
Wouldn't it be decrease quantity and increase price?
50) you are right
51) No. if MR>MC, the monopolist should increase quantity and decrease price.
52) No. this is just the opposit of 51.
Draw a graph of a monopolist. for 51, select a point where MR>MC. What direction is the optimal point with respect to quantity and price?
Thanks for the information.
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