The monopolistically competitive firm differs from a monopoly in that the monopolistically competitive firm:

Select one:

a. demand curve is flatter than that of a monopoly.

b. marginal revenue curve lies below its demand curve unlike a monopoly.

c. profit is maximized at the quantity where marginal revenue = marginal cost unlike a monopoly which profits are maximized where marginal revenue equals total cost.

d. a price maker where a monopoly is a price maximizer.

Assume a market is in equilibrium. If demand increases by more than supply declines what happens to equilibrium price and quantity?

Select one:

a. Both equilibrium price and equilibrium quantity increase.

b. Equilibrium price increases but equilibrium quantity decreases.

c. Equilibrium price decreases but equilibrium quantity increases.

d. Both equilibrium price and equilibrium quantity decrease.

If the income of renters is falling what should happen to the equilibrium monthly rent of an apartment if it is a normal good?

Select one:

a. Rents should rise as demand is falling.

b. Rents should fall as supply is decreasing.

c. Rents should fall as demand is decreasing.

d. Rents should rise as supply is increasing.

e. Rents should rise as demand is increasing.

As described in the assigned readings, assume a market is described by the following functions: Qs = 10 + 2P and QD = 20 - 3P what is the equilibrium price and equilibrium quantity?

Select one:

a. P = 1, Q = 12

b. P = 2, Q = 14

c. P = 6, Q = 2

d. P = 30, Q = 30

e. None of the above