The Diagram Below Shows Demand and Cost Curves for a Monopolistically

question 103

Multiple Choice

The diagram below shows demand and cost curves for a monopolistically competitive firm.
FIGURE 11- 3
-Refer to Figure 11- 3.A monopolistically competitive firm is allocatively inefficient because in the long- run equilibrium

• A)MC is greater than price.
• B)LRAC is not at its minimum.
• C)price is greater than LRAC at Q1.
• D)price is greater than MC at Q1.
• E)None of the above - the long- run equilibrium is allocatively efficient.

Understand how market forces of demand and supply affect short-run and long-run market prices and quantities.

Apply knowledge of cost functions to calculate optimal output and understand its implications on a firm’s profitability.

Recognize the conditions necessary for long-run equilibrium under perfect competition and the implications for firm entry and exit.

Identify and explain the differences among constant-cost, increasing-cost, and decreasing-cost industries and their impact on market equilibrium.

---

Definitions:

Parkinson's Disease

A chronic and progressive neurological disorder characterized by tremors, stiffness, and slow movement, resulting from the loss of dopamine-producing brain cells.

Propulsive

Generating a force that drives or pushes forward, typically used in reference to movement or motion.

Antalgic

Related to or denoting a gait or posture adopted so as to avoid pain on weight-bearing structures, often due to injury.

High-risk Pregnancy

A pregnancy that involves increased health risks for the pregnant individual, the developing fetus, or both, due to various medical conditions or factors.