Asked by Donna Mowell on Jun 12, 2024
Verified
(Figure: Profit Maximization in Monopolistic Competition) Use Figure: Profit Maximization in Monopolistic Competition.When the demand curve for a firm in monopolistic competition shifts,the marginal revenue curve:
A) must also shift.
B) shifts in the opposite direction.
C) will stay the same.
D) will shift,but the profit-maximizing quantity will not change.
Marginal Revenue Curve
A graphical representation showing how marginal revenue varies as output varies.
Demand Curve
A graph that represents the relationship between the price of a good and the quantity demanded by consumers at various price levels.
- Elaborate on the effects of market demand fluctuations on pricing, output, and earnings in both immediate and extended timelines.
- Investigate how changes in demand and cost factors influence a business's choices about price setting and quantity of output.
Verified Answer
SL
Sherry LabibJun 18, 2024
Final Answer :
A
Explanation :
The marginal revenue curve is based on the demand curve. Therefore, when the demand curve shifts, the marginal revenue curve must also shift in the same direction.
Learning Objectives
- Elaborate on the effects of market demand fluctuations on pricing, output, and earnings in both immediate and extended timelines.
- Investigate how changes in demand and cost factors influence a business's choices about price setting and quantity of output.
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