Re: micro problems

Posted by Chocolate Frog on May 03, 2012; 4:12pm
URL: http://discussion-forum.276.s1.nabble.com/micro-problems-tp7523947p7524173.html

Answer to the first question should be (a) because MR is increasing in output, and even if cost is increasing in output, there's no guarantee that MC will ever exceed MR.

As for the second question, I think the only difference between long run equilibria of monopolistically competitive and perfectly competitive firms is the presence of excess capacity in the former. So, the answer to the second question should be (b).