An empirical study determines that price exceeds marginal cost at the levels of output of firms in long-run equilibrium in the widget industry.The widget industry may therefore
A)be monopolistically competitive.
B)have firms whose goal is sales maximization.
C)have firms that act as price leaders.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

If the price exceeds the marginal cost in the long-run equilibrium of the widget industry, it suggests that there may be some degree of market power or monopolistic competition. This supports the possibility of sales maximization or firms acting as price leaders. Therefore, all of the options offered could be plausible explanations for the findings of the empirical study.

An Empirical Study Determines That Price Exceeds Marginal Cost at the Levels