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What is the formula for Marginal Product of Labor (MPʟ) and for Marginal Product of Capital (MPᴋ)?
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- In contrast with perfect competition, a monopolist: a. produces where MR>MC, and a perfectly competitively firm produces where P=MCb. May have economic profits in the long runc. Earn zero economic profits in the long rund. produces more at a lower price
- In the short run, a monopolistically competitive firm produces at the optimal level of output and is earning positive economic profits. Which of the following describes how the firm will adjust in the long run? A. The entry of new firms shifts the firm's marginal cost and average cost curves downward, decreasing the firm's level of output and the price the firm can charge until price equals average total cost.B.The exit of firms shifts the firm's demand and marginal revenue curves rightward, increasing the firm's level of output and the price the firm can charge until price equals average total cost.C.The entry of new firms shifts the firm's demand and marginal revenue curves leftward, decreasing the firm's level of output and increasing the price the firm can charge until price equals average total cost.D. The entry of new firms shifts the firm's demand and marginal revenue curves leftward, decreasing the firm's level of output and the price the firm can charge until price equals average total cost.
- The model of monopolistic competition can characterize the market for plumbing services in a city. This market is initially in long-run equilibrium, but there is an increase in demand for plumbing services. We expect that in the long run:A. New firms will enter the plumbing marketB. There will be a short-run increase in the number of firms, but then the number will return to its original level.C. Firms will shut down, but they will not leave the industryD. Firms will leave the plumbing market