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A Monopolistically Competitive Firm Is Currently Producing 20 Units of Output

Question 236

Multiple Choice

A monopolistically competitive firm is currently producing 20 units of output. At this level of output the firm is charging a price equal to $20, has marginal revenue equal to $12, has marginal cost equal to $12, and has average total cost equal to $18. From this information we can infer that


A) the firm is currently maximizing its profit.
B) the profits of the firm are negative.
C) firms are likely to leave this market in the long run.
D) All of the above are correct.

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