Texts: Robert Miller has a takeaway shop, Miller Place, which is known in the community for selling the best hamburgers in town. He has to compete with many other takeaway shops that also sell hamburgers. Miller's hamburgers are a little bit more expensive than those of some of the other shops. Miller uses 100% beef patties for a hamburger and a 'secret' trimming which distinguishes his hamburgers from his competitors' hamburgers. Although Miller can decide what price he wants to ask for hamburgers he is selling, he is very concerned about the increase in the petrol price.
2. Which of the following statements describes the market that Miller's business is operating in?
A. Miller, as a monopolistic competitive supplier, maximizes profits at the price and output level of hamburgers at which marginal revenue is greater than marginal cost.
B. Miller is a price leader; he can determine the prices and output where marginal revenue is equal to marginal cost.
C. If Miller lowers the price of his hamburgers, the sales will increase. If he raises the price slightly, he loses some but not all customers to competitors.
D. In the long run, suppliers in the market will earn economic profit, and each individual supplier's demand for its product will increase.