Does the Monopolistic Competitive Firm Exhibit Resource-Allocative Efficiency

question 84

Multiple Choice

Does the monopolistic competitive firm exhibit resource-allocative efficiency?

• A)No, because at its chosen quantity of output, price does not equal the lowest possible average total cost.
• B)Yes, because at its chosen quantity of output, price equals marginal cost.
• C)No, because at its chosen quantity of output, price is greater than marginal cost.
• D)Yes, because at its chosen quantity of output, price is less than marginal cost.

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Definitions:

Early Retirement

The act of leaving the workforce before the traditional retirement age, often with incentive packages offered by employers.

Labor Surplus

A situation where the number of available workers exceeds the number of available jobs, often leading to unemployment or underemployment.

Work Sharing

A program that allows employees to reduce working hours during economic downturns as an alternative to layoffs, with the aim of spreading a reduced amount of work over the same or a larger number of employees.

Hiring Freeze

A policy implemented by organizations to temporarily halt the recruitment of new employees.