Monopoly and Monopolistic Competition

Chapter 11 Quiz
9. So long as price exceeds average variable cost, in the model of monopolistic competition, a
firm maximizes profits by producing where
A. the difference between marginal revenue and marginal cost is maximized.
B. marginal cost equals marginal revenue.
C. marginal revenue equals price.
D. the difference between price and marginal cost is maximized.
E. price equals marginal cost.
10. Consider Fred, who is employed by a national tire store and who earns a commission
selling tires. He earns 25 percent of his gross sales revenue as a bonus. Fred's objective is to
maximize
A. total profits for the store.
B. total revenues for the store.
C. marginal revenue from sales.
D. the difference between marginal revenues and marginal cost for the store.
E. the number of customers he waits on per day.
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