Use the Following to Answer Question

question 95

Multiple Choice

Use the following to answer question:
Figure: Monopolistic Competitor
-(Figure: Monopolistic Competitor) Use Figure: Monopolistic Competitor.If the firm shown in the figure produces at its profit-maximizing level,it will produce:

• A)with excess capacity since its P is greater than MR.
• B)without excess capacity since P is greater than ATC.
• C)with excess capacity since that output level is on the downward-sloping portion of the ATC curve.
• D)without excess capacity since that output level is on the downward-sloping portion of the MR curve.

---

Definitions:

Making Part

The process involved in the creation or manufacturing of components that will be used in the assembly of a final product.

Purchasing Part

A component required in the production process or maintenance of equipment, acquired through the procurement process.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much contributes to covering fixed costs and generating profit.

Normal Sales

The expected amount of sales based on historical data, market conditions, and economic forecasts, under regular business operations.