In contrast with perfect competition, excess capacity characterizes monopolistic competition. Excess capacity is due to which of the following?
A) Monopolistically competitive firms face downward-sloping demand curves. In the long run, firms produce where their demand curves are tangent to their long-run average total cost curves.
B) Monopolistically competitive firms produce at the minimum point on their average total cost curves.
C) Monopolistically competitive markets have low barriers to entry.
D) Monopolistically competitive firms produce where marginal revenue is equal to marginal cost.
A
You might also like to view...
The economy's factors of production are not equally suitable for producing different types of goods. This principle generates:
A) economic growth. B) technical efficiency. C) resource underutilization. D) the law of increasing opportunity cost.
The chair of the Board of Governors of the Fed serves: a. a two-year term that coincides with that of members of Congress. b. a four-year term
c. a seven-year term. d. a fourteen-year term. e. a six-year term.