The Diagram Below Shows Demand and Cost Curves for a Monopolistically

question 77

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 said to be inefficient because in the long-run equilibrium

• A)MC is greater than LRAC.
• B)MC is greater than price.
• C)price is greater than MC at Q1.
• D)price is greater than LRAC at Q1.
• E)LRAC at Q1 is not at its minimum.

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Definitions:

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for competition.

Mandarin Oranges

A small citrus fruit with a sweet flavor and easy-to-peel skin, often eaten fresh or used in salads.

Cable TV Service

A system of delivering television programming to consumers via radio frequency signals transmitted through coaxial cables or digital light pulses.

Interdependent Firms

Companies whose operations and outcomes are mutually influenced, typically seen in competitive markets where the actions of one firm affect the sales and strategies of others.