TRUE or FALSE questions. Answers need to

be supported with an economic model.

a.When a monopoly makes economic profits, price equals AR and larger than ATC.

b.At a level of output where MR exceeds MC, the profit-maximising monopolist could increase profits by lowering price.

c.A monopoly can make an economic profit even in the long run because barriers prevent competitors from entering the industry.

d.The demand curve facing a monopolistically competitive firm is highly elastic. This means that P = AR = MR for that firm.

e.Monopolistically competitive firms that are operating under long run equilibrium will achieve both allocative and productive efficiency.