Which of the Following Is True of the Output Level

question 120

Multiple Choice

Which of the following is true of the output level produced by a firm in long-run equilibrium in a monopolistically competitive industry?

• A) It produces at minimum average cost.
• B) It does not produce at minimum average cost, and average cost is increasing.
• C) It does not produce at minimum average cost, and average cost is decreasing.
• D) Either B or C could be true.

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Definitions:

Hedging Instrument

A financial contract used to offset potential losses or gains that may be incurred by a companion investment.

Forward Contract

A financial agreement between two parties to buy or sell an asset at a specified future time at a price agreed upon today, not traded on an exchange.

Purchase Order

A formal document issued by a buyer to a seller, authorizing the purchase of goods or services as specified at agreed-upon terms.

Fair-Value Hedge

A hedge that protects against changes in the fair value of an asset, liability, or firm commitment that is attributable to a particular risk.