To Choose: The correct option that distinguishes monopolistic competition from the given options.

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Chapter 17, Problem 1MCQ

To determine

To Choose:

The correct option that distinguishes monopolistic competition from the given options.

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Question 1a. With the aid of a diagram explain how a monopolist determines how much output to produce and what price to charge. b. Explain how the perfectly competitive firm decides whether to operate or shut down in the short run. c. Explain why firms operating in monopolistically competitive markets probably will not earn an economic profit in the long run. d. Why does interdependence of firms play a major role in oligopoly but not in perfect competition or monopolistic competition? Question 2a. A producer borrows money and starts a business. He himself looks after the business. Identify implicit and explicit costs from this information. Explain. b. List and explain which of the following is a fixed cost or a variable cost for Caribbean Airlines. i. The cost of fuel used in its planes. ii. The rent on its Piarco headquarters. iii. The lease payments on its current inventory of jets. iv. The cost of peanuts it serves to passengers. v. The salary paid to the Chief Executive Officer. c.…

Question 1a. With the aid of a diagram explain how a monopolist determines how muchoutput to produce and what price to charge. [4 marks]b. Explain how the perfectly competitive firm decides whether to operate or shutdown in the short run. [4 marks]c. Explain why firms operating in monopolistically competitive markets probablywill not earn an economic profit in the long run. [4 marks]d. Why does interdependence of firms play a major role in oligopoly but not inperfect competition or monopolistic competition? [4 marks]

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