Post Utme Uniosun 2017 Economics Question 21

Practice objective / multiple choice question 21 from the 2017 Post Utme Uniosun Economics examination.

Post Utme Uniosun 2017 Economics Objective / Multiple Choice
Question 21 POST_UTME_UNIOSUN • 2017 • ECONOMICS • objective

A firm operating in a perfectly competitive market will always produce at the point where its marginal revenue equals its marginal \cost. However, this is not the case for a monopolistically competitive firm. Explain why.

Answer Options

Correct Answer A. Because a monopolistically competitive firm faces a downward-sloping demand curve, it will produce at a point where its marginal revenue is greater than its marginal \cost.
B. Because a monopolistically competitive firm has a fixed \cost, it will produce at a point where its marginal revenue is less than its marginal \cost.
C. Because a monopolistically competitive firm faces a cons\tant elasticity of demand, it will produce at a point where its marginal revenue is equal to its marginal \cost.
D. Because a monopolistically competitive firm has a variable \cost, it will produce at a point where its marginal revenue is greater than its marginal \cost.
Correct Answer
A
Correct Option:
Because a monopolistically competitive firm faces a downward-sloping demand curve, it will produce at a point where its marginal revenue is greater than its marginal \cost.

About This Question

This is Post Utme Uniosun 2017 Economics Question 21. It is one of the objective questions from the 2017 Post Utme Uniosun Economics examination.

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