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:

GST and PST

Taxes applied to the sale of goods and services; GST is a federal tax in Canada, while PST is a provincial sales tax.

Sold

The act of exchanging a product or service for money or other consideration.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, assigning weights to each number.

Shares Outstanding

The total number of shares of a corporation that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.