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Subject - Economics:

Microeconomics

MCQ - 155-4165

Question:

The monopolistically competitive price is above marginal revenue because

  1. firms have differentiated products.
  2. firms are price takers.
  3. firms produce a homogenous product.
  4. firms are price takers.
  5. profits are normal in the long run.

Correct Answer: A

Explanation:

Product differentiation results in a small degree of price-setting ability and downward-sloping demand curves for the firms. P = ATC and profits are normal in the long run, and this output level does not occur where ATC is minimized. This defines excess capacity.

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269 MCQ for effective preparation of the test of Microeconomics of Economics section.

Read the MCQ statement: The monopolistically competitive price is above marginal revenue because , keenly and apply the method you have learn through the video lessons for Microeconomics to give the answer. Record your answer and check its correct answer and video explanation for MCQ No. 155-4165.

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