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2. Indicate whether each of the following statements is true or false and explain why. A competitive firm that is incurring a loss should immediately
2. Indicate whether each of the following statements is true or false and explain why.
- A competitive firm that is incurring a loss should immediately cease operations.
- A pure monopoly does not have to worry about suffering losses because it has the power to set its prices at any level it desires.
- In the long run, firms operating in perfect competition and monopolistic competition will tend to earn normal profits.
- Assuming a linear demand curve, a firm that wants to maximize its revenue will charge lower price than a firm that wants to maximize its profits.
- If P > AVC, a firm's total fixed cost will be greater than its loss.
- When a firm is able to set its price, its price will always be less than its MR.
- A monopoly will always earn economic profit because it is able to set any price that it wants to.
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