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August 23, 2014

Homework Help: Microeconomics

Posted by G on Monday, October 20, 2008 at 9:38am.

Monopolistic Competition

A monopolistically competitive market could be considered inefficient because:

A. Marginal revenue exceeds average revenue

B. Price exceeds marginal cost

C. Efficient scale is realized in the long run, but not in the short run

D. Markup pricing does not occur in any other market structure

I picked B?

The administrative burden of regulating price in monopolistically competive market:

A. small due to economies do scale

B. large because price is usually below marginal cost

C. large because of the large number of firms that produce differentiated products

D. small because firms produce with excess capacity

I picked B?


I already put this question on the board before. I had originally picked D. The reponse was to go with A. When I was reviewing some other quesitons in the book, there was a sentence that appeared to state the answer to this that went along with D.

Could you please take a second look?

A profit-maximizinf firm in monopolistically competitive market characterized by which of the following?

A. Average revenue exceeds marginal revenue.

B. Marginal revenue exceeds average revenue.

C. Average revenue is equal to marginal revenue.

D. Revenue is always maximized along with profit.

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