Consider a Monopolistically Competitive Industry in Long-Run Equilibrium

question 64

Multiple Choice

Consider a monopolistically competitive industry in long-run equilibrium.Will this industry be productively efficient?

• A)Yes.Since the firms are in long-run equilibrium,they will all be producing at the minimum of their LRAC curves.
• B)Yes.Since the firms are in long-run equilibrium,they will all be operating on their LRAC curves.
• C)Yes.In long-run equilibrium,each firm is producing at an output level where price is equal to marginal cost.
• D)No.Firms are selling their output at a level where price exceeds marginal cost and thus,by definition,cannot be productively efficient.
• E)No.Since firms are selling differentiated products and there is no industry-wide price,we cannot conclude that marginal cost will be equated across all firms.

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Definitions:

Females

The sex of an organism, or a part of an organism, that produces non-motile ova (egg cells) and can typically bear offspring.

Ghrelin

A hormone produced in the stomach that stimulates appetite and signals the brain to increase food intake.

Genetics

The branch of biology that studies heredity.

Variations

Variations refer to differences or deviations in the characteristics of an organism, or in any other measured data, from those typical of the species or the norm.