Costume jewelry is produced in a monopolistically competitive market. A profit-maximizing producer finds that marginal revenue = marginal cost = $4.50 when output is 700 rings. An economist studying this information can conclude that:
A) the producer is charging a price of $4.50.
B) economic profit is $3,150.
C) the producer charges a price greater than $4.50.
D) new firms will want to enter.
E) this producer should produce more than 700 rings.
Correct Answer:
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