With Regard to the Long-Run Equilibrium in the Two Market

question 39

Multiple Choice

With regard to the long-run equilibrium in the two market structures,the higher unit costs in monopolistic competition relative to perfect competition implies that

• A)society would be better off if there were fewer,and more homogeneous,goods produced at the scale at which average costs are minimized.
• B)resources are being used inefficiently in perfect competition.
• C)there is a tradeoff between product variety and the ability to minimize cost per unit.
• D)firms are restricting output to extract positive economic profits.
• E)the government should force monopolistically competitive firms to behave like perfectly competitive firms.

---

Definitions:

Annual Rate

the interest rate for a whole year, rather than just a shorter period.

Accrued Interest

The interest on a loan or bond that has accumulated since the principal investment, or since the last interest payment, if there has been one.

Daily Balance

A method of calculating interest where the amount owed or due is recalculated each day, based on the balance of the account at the end of each day.

Borrowed

Refers to money or goods taken on loan with the obligation to return it or pay it back, usually with interest, within a specified period.