This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.
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Question 22 Step 1: In perfect competition, the firm faces a horizontal demand curve, so MR = AR = P. Step 2: The firm increases output as long as the marginal benefit exceeds the marginal cost, i.e., as long as MR > MC or MC < MR. Step 3: The firm continues to expand output up to the point where this condition holds, which matches option D. MC < MR D D Question 23 Step 1: A monopolist is the sole producer in the market with no close substitutes. Step 2: Therefore, by changing output, the monopolist affects both market price and market quantity. Step 3: There are no other producers, so the monopolist cannot influence quantities or prices charged by others (eliminates B and C). Step 4: Option A says "price or quantity" but the monopolist influences both simultaneously via the demand curve. D D