The _____ is the change in the purchasing power of assets that causes spending to change when the price level changes

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.

When price is greater than both marginal cost and average variable cost, the perfectly competitive firm

A) is maximizing economic profit. B) should increase its level of output. C) should reduce its level of output. D) should stop production.