The ajax corporation has the following set of projects available to it:
project*
investment required
($ million)
expected rate
of return
a 500 23.0%
b 75 18.0
c 50 21.0
d 125 16.0
e 300 14.0
f 150 13.0
g 250 19.0
*note: all projects have equal risk.
ajax can raise funds with the following marginal costs:
first $250 million 14.0%
next 250 million 15.5
next 100 million 16.0
next 250 million 16.5
next 200 million 18.0
next 200 million 21.0
use the marginal cost and marginal revenue concepts developed in this chapter to
derive an optimal capital budget for ajax.

Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact thatmr=mc at the optimal quantity for each firm. furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium isless than the minimum average total cost. true or false: this indicates that there is a markup on marginal cost in the market for engines. true false monopolistic competition may also be socially inefficient because there are too many or too few firms in the market. the presence of the externality implies that there is too little entry of new firms in the market.