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Question
Costume jewelry is produced in a monopolistically competitive market. A profit-maximizing producer finds that marginal revenue equals marginal cost equals $4.50 when output is 700 rings. An economist studying this information can conclude that
a. the producer is charging a price of $4.50.
b. economic profit is $3,150.
c. the producer charges a price greater than $4.50.
d. new firms will not want to enter this market.
e. this producer should produce more than 700 rings.
Answer
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