The Diagram Below Shows Demand and Cost Curves for a Monopolistically

question 2

Multiple Choice

The diagram below shows demand and cost curves for a monopolistically competitive firm. FIGURE 11- 3
-Refer to Figure 11- 3. Which of the following is a demonstration of the excess- capacity theorem?

• A) PL = LRAC with zero profits
• B) PL = MC with zero profits
• C) QL is less than QC
• D) LRAC at QL is not at its minimum.
• E) both C and D demonstrate the excess- capacity theorem

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