The Excess-Capacity Theorem Predicts That

question 83

Multiple Choice

The excess-capacity theorem predicts that

• A)when price-taking firms maximize their profits by setting price equal to marginal cost,each firm operates with some excess capacity.
• B)long-run equilibrium in a monopolistically competitive industry occurs with all firms producing at a lower output level than that which minimizes average total costs.
• C)profit-maximizing firms will always choose to operate with some degree of excess capacity,in order to be flexible in the face of shifts in demand.
• D)monopolistic firms will achieve positive economic profits by restricting output below the economically efficient level at which average total costs are minimized.
• E)all firms in a perfectly competitive industry will produce at a lower output level than that which minimizes average total costs.

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Definitions:

Cell Cycle

An ordered sequence of events in eukaryotes that involves cell growth and nuclear division; consists of the stages G1, S, G2, and M.

Poly-A Tail

A stretch of adenine nucleotides added to the 3' end of mRNA molecules, protecting the mRNA and aiding in its export from the nucleus.

Transcriptional

Pertaining to transcription, the process by which genetic information from DNA is copied to RNA, leading to protein synthesis.

Posttranscriptional

Pertaining to modifications and processes that occur in a eukaryotic cell after transcription of DNA into RNA, affecting mRNA stability, translation, and other aspects.