The Diagram Below Shows Selected Cost and Revenue Curves for a Firm

question 46

Multiple Choice

The diagram below shows selected cost and revenue curves for a firm in a monopolistically competitive industry.
FIGURE 11-4
-Refer to Figure 11-4.How is the excess-capacity theorem demonstrated in this diagram?

• A)The short-run equilibrium occurs where the firm is producing output at q0,which is less than that corresponding to the lowest point on its LRAC curve.
• B)The long-run equilibrium occurs where the firm is producing output at q1,which is the same as for a perfectly competitive industry.
• C)In long-run equilibrium the firm is earning positive profits,but has unexploited economies of scale.
• D)In long-run equilibrium,this firm has excess capacity because they are selling output at a price below their LRAC.
• E)The long-run equilibrium occurs where the firm is producing output at q0,which is less than that corresponding to the lowest point on its LRAC curve.

---

Definitions:

Discussion Boards

Online platforms where individuals can post messages, share opinions, and discuss various topics in a structured or unstructured manner.

Multimedia Programs

Computer applications that use a combination of different content forms such as text, audio, images, animations, video, and interactive content.

Return on Investment

A financial measure used to evaluate the efficiency of an investment or compare the efficiency of multiple investments, calculating the return relative to the investment's cost.

Development Cost

Expenses associated with creating and implementing a training program, educational course, or new product.