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saw5 [17]
3 years ago
9

Suppose Susan owns a business that operates in a market characterized by monopolistic competition. Susan's profit-maximizing pri

ce is $12, her profit-maximizing output is 900 units per week, and her profits are $1,800 per week. Susan decides that she needs more profits and therefore raises her price to $15. At the new price of $15:____________
A) profits will increase.
B) profits will remain at $1,800.
C) marginal revenue will be greater than marginal cost.
D) marginal revenue will be less than marginal cost
Business
2 answers:
nadya68 [22]3 years ago
7 0

Answer:

The answer to this question is Option C.

marginal revenue will be greater than marginal cost. 

Explanation:

Monopolistic competition characterizes an industry in which many firms offer products or services that are similar, but not perfect substitutes.

There is  low barrier to entry and exit in a monopolistic competitive industry and the decisions of any one firm do not directly affect those of its competitors.In a monopolistic competition, there is  a negative relationship between price and quantity demanded.

 

If Susan increases her price to $15, marginal revenue will be greater than marginal cost.  

Hence the answer is Option C

densk [106]3 years ago
4 0

Answer:

C) marginal revenue will be greater than marginal cost. 

Explanation:

A monopolistic competition is when there are many buyers of differentiated goods. The demand curve of a monopolistic competition is downward sloping. This downward sloping demand curve indicates that there's a negative relationship between price and quantity demanded.

If Susan increases her price to $15, all things being equal, Quanitity demanded would fall and her profit would fall.

At the profit maximising price of $12, marginal revenue is equal to marginal cost. So if price is increased to $15, marginal revenue would exceed marginal cost.

I hope my answer helps you

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