Refer to Figure 9.17.In the long run,why will the firm produce Qf units and not Qgunits,which has a lower average cost of production?
A) Although its average cost of production is lower when the firm produces Qgunits, to be able to sell its output the firm will have to charge a price below average cost, resulting in a loss.
B) At Qg, average cost exceeds marginal cost so the firm will actually incur a loss.
C) At Qg, marginal revenue is less than average revenue, which will result in a loss for the firm.
D) The firm's goal is to charge a high price and make a small profit rather than charge a low price and make no profit.
Refer to Figure 9.18.Which of the following statements is true?
A) Da represents the long-run demand curve facing a monopolistic competitor in a constant-cost industry while Dbdepicts the demand curve in the short run.
B) Darepresents the long-run demand curve facing a monopolistic competitor in a constant-cost industry while Dbdepicts the long-run demand curve in an increasing-cost industry.
C) Darepresents the long-run demand curve facing a perfect competitor while Dbdepicts the long-run demand curve facing a monopolistic competitor.
D) Darepresents the long-run supply curve in a perfectly competitive, constant-cost industry while Dbdepicts the long-run demand curve facing a monopolistic competitor in a decreasing-cost industry.
Refer to Figure 9.18.The diagram demonstrates that ___________.
A) in the short run, the monopolistic competitor produces an output Qb, but in the long run after it adjusts its capacity, it will produce the allocatively efficient output, Qa.
B) it is not possible for a monopolistic competitor to produce the productively efficient output level, Qa,because of product differentiation.
C) it is possible for a monopolistic competitor to produce the productively efficient output level, Qa,if it is willing to lower its price from Pbto Pa.
D) in the long run, the monopolistic competitor produces the minimum-cost output level, Qa,but in the short run its output of Qb is not cost minimising.
It is true in both monopolistically competitive and perfectly competitive industries that _______.
A) firms produce products for which there are no close substitutes
B) there are high barriers to entry
C) there are many buyers and sellers
D) firms are price takers