Micro 4.4-Monopolistic Competition Consultants, Inc.

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You have been retained by seven corporations to advise them on their future output and price decisions. These firms are listed on Figure 38.1. Each firm is monopolistically competitive and desires to maximize its profits or minimize its losses. Before making your recommendations, fill in as much of the

incomplete data in the table as possible. Although you may not be able to fill in every box, there are

sufficient data in each case to recommend action that is in the best interest of the firm. After you have analyzed each case, decide which statement below is SINGLE best course of action for the firm involved. Place the number of the statement in the answer column.

Based on the table, sort each case into the appropriate category.

Nonsense: The information is inconsistent and could not be correct or is lacking critical information for decision making.
This firm should shut down in the short run because its revenue does not exceed variable cost.
This firm should exit in the long run because its revenue does not exceed total cost.
This firm should operate by reducing production and increasing price.
This firm should operate by increasing production and reducing price.