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statuscvo [17]
3 years ago
7

Verslas is a firm operating in a monopolistically competitive market. It is currently maximizing profit with an output of 1,200

units and a price of $5. Based on this information, which of the following statements must be true?
a. Verslas could not sell more units by lowering its price.
b. Verslas is earning normal profit.
c. Verslas is earning $3,600 in profit.
d. Verslas has a marginal revenue less than $5.
e. Verslas has a marginal revenue greater than $5.
Business
1 answer:
Marina86 [1]3 years ago
3 0

Answer:

b

Explanation:

A monopolistic competition is when there are many firms selling differentiated products in an industry. A monopolistic competition has characteristics of both a monopoly and a perfect competition. the demand curve is downward sloping. it sets the price for its goods and services.

An example of monopolistic competition are restaurants  

When firms are earning positive economic profit, in the long run, firms enter into the industry. This drives economic profit to zero

If firms are earning negative economic profit, in the long run, firms leave the industry.  This drives economic profit to zero

in the long run, only normal profit is earned

If Verslas is producing at a profit maximising point, it means that marginal revenue equal marginal revenue and the firm is earning a normal profit

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2 years ago
Outdoor Expo provides guided fishing tours. The company charges $300 per person but offers a 20% discount to parties of four or
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Answer:

May 2  No entry is required as the transaction is yet to happen

May 7  DR Accounts Receivable                                       $1,200

                 CR Tour Revenue                                                           $1,200

May 9  DR No entry required

May 15  DR Sales Allowance (1,200 * 30%)                        $360

                    CR Accounts Receivable                                             $360

May 20  DR Cash                                                             $789.60

              DR Sales Discount                                              $50.40

                    CR Accounts Receivable                                            $840

Working

Accounts Receivable = 1,200 - 360 sales allowance = $840

Sales Discount = 840 * 6% discount = $50.40

Cash = 840 - 50.40 = $789.60

b. Net Revenues

=  Revenue - Sales allowance - Sales discount

= 1,200 - 360 - 50.40

= $789,60

c. Partial Income Statement

Tour Revenues                                                         $1,200

Less:

Sales Allowance                                   $360

Sales Discount                                   <u> $50.60 </u>    

                                                                             <u>  ($410.60)</u>

Net Tour Revenue                                                 $789.40

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Hence from the above we can conclude that the economist should be concerned with col linearity.

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