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Question
If the price that determined where marginal revenue equaled marginal cost were below the bottom of the average variable cost curve, then the profit-maximizing, monopolistically competitive firm would
a. produce an output amount where marginal cost equals marginal revenue and make a small profit.
b. produce an output amount that corresponded to the place where marginal cost equals marginal revenue and break even.
c. produce an output amount that corresponded to the place where marginal cost equals marginal revenue, but make a small loss.
d. shut down because it would cost more to produce and sell output than it would to shut down and lose all fixed costs.
e. produce an output amount that corresponded to the place where average total cost equals average variable cost and incur a small loss.
Answer
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