Question

you are a manager for a monopolistically competitive firm. from experience, the profit-maximizing level of output of your firm is 100 units. however, it is expected that prices of other close substitutes will fall in the near future. how should you adjust your level of production in response to this change? multiple choice produce more than 100 units. produce less than 100 units. produce 100 units. there is insufficient information to decide.

Answer 1

It is expected that prices of other close substitutes will fall in the near future. How should you adjust your level of production in response to this change produce less than 100 units. Hence, option A is right.

A company that owns the exclusive right to produce a specific good or service is said to be operating as a monopolistic enterprise. These goods are profit-maximizing goods because market prices are set by consumer demand, and they are manufactured at marginal costs that are equivalent to their marginal revenues.

It is advisable to create fewer than the customary 100 units to still maximize profit when the prices of the product's near substitutes drop because this will result in a decrease in demand and a corresponding decrease in market pricing.

To know more about close substitutes: brainly.com/question/3262385

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