Question

Question 19 (Mandatory) (5 points) In short-run equilibrium, a firm in a monopolistically competitive market produces at a level of output at which OA) no new entry will occur. OB) the revenue generated by selling an additional unit is equal to the cost of producing the additional unit. C) the firm breaks even. D) the revenue per unit is equal to the cost per unit. Question 20 (Mandatory) (5 points) A natural monopoly OA) is a market in which long-run average cost is declining for the entire range of market output. OB) is a market in which it is most efficient to have one firm produce the entire market output. c) is often regulated to ensure more beneficial price and output conditions for consumers. OD) All of the above.

Answer 1

19.

The correct answer is D.

In short run equilibrium, monopolistic firm produces at a level of output at which marginal revenue is equal to marginal cost.

20.

The correct answer is D.

All of the mentioned options are correct for natural monopoly. It defines a situation where only one firm is good enough to satisfy the whole market.