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.

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Definitions:

Consumption Bundle

A consumption bundle is a combination of various goods and services that an individual, household, or economy consumes over a given period.

Inferior Good

A type of good whose demand decreases when consumer income rises, inverse to a normal good.

Indifference Curve

A graphical representation that shows different combinations of two goods among which a consumer is indifferent.

Total Utility

The total satisfaction or benefit a consumer receives from consuming a particular quantity of goods or services.