Question :
51) Which of the following statements about a firm in : 1226252
51) Which of the following statements about a firm in long-run equilibrium is true?
A) P > MC for a firm in monopolistic competition and P = ATC for a firm in perfect competition
B) MR > P for a firm in monopolistic competition and P = ATC for a firm in perfect competition
C) P = MC for firms in both monopolistic competition and perfect competition
D) P = MC for a firm in perfect competition and P < ATC for a firm in monopolistic competition
E) Both answers A and B are correct.
52) A firm in monopolistic competition is
A) efficient because in the long run it makes zero economic profit.
B) efficient because it produces at the minimum average total cost.
C) inefficient because price exceeds marginal cost.
D) efficient because of the ease of entry.
E) efficient because it produces where MR = MC.
53) A monopolistically competitive firm is inefficient because the firm
A) makes positive economic profit in the long run.
B) is producing at an output where marginal cost equals price.
C) is not maximizing its profits.
D) produces a product identical to that of its competitors.
E) produces at an output level where average total cost is not at its minimum.
54) Monopolistic competition is judged to be economically inefficient because
A) the price is greater than marginal cost.
B) firms make zero economic profit in the long run.
C) marginal revenue equals marginal cost.
D) firms have deficient capacity in the long run.
E) firms make an economic profit in the long run.
55) One of the major benefits to society of monopolistic competition is
A) high prices.
B) restricted output.
C) product differentiation.
D) the excess capacity.
E) the markup.
56) In monopolistic competition, there is inefficiency because price is greater than marginal cost. What brings about this inefficiency?
A) high concentration, as indicated by the large concentration ratio
B) product differentiation
C) freedom of entry and exit
D) marginal cost rises as more output is produced
E) the fact there are many firms in the market
57) Even though monopolistic competition results in inefficiency, it does have which of the following benefits for society?
A) Firms make zero economic profit in the long run.
B) Firms can make an economic profit in the short run.
C) Product variety benefits consumers.
D) Marginal cost equals price in the long run.
E) The premise of the question is incorrect because nothing in monopolistic competition justifies any economic inefficiency.
58) Which of the following is an advantage to society of monopolistic competition?
A) production at the lowest possible average cost
B) product variety
C) Only essential costs are incurred.
D) long-run profitability
E) The firms have excess capacity so they are are always willing to increase their production.
59) A firm in monopolistic competition maximizes profit by equating
A) price and marginal revenue.
B) price and marginal cost.
C) demand and marginal cost.
D) marginal revenue and marginal cost.
E) price and average total cost.
60) Once a firm in monopolistic competition has determined how much to produce, the firm determines its price by referring to its
A) demand curve.
B) marginal cost curve.
C) marginal revenue curve.
D) average total cost curve.
E) average variable cost curve.
