When a Monopolistically Competitive Industry Is in Long- Run Equilibrium

question 69

Multiple Choice

When a monopolistically competitive industry is in long- run equilibrium, the excess capacity in an individual firm is indicated by the difference between

• A) price and average cost.
• B) zero and the output at which the demand curve is tangent to the ATC curve.
• C) the output at which ATC is at a minimum and the output at which price equals marginal cost.
• D) the output at which ATC is at a minimum and the output at which marginal revenue is equal to marginal cost.
• E) price and marginal cost.

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Definitions:

Acquisition Differential

The difference between the cost of acquiring a company and the fair value of its identifiable net assets, often recognized as goodwill.

Business Combination

A transaction or event in which an acquirer gains control over one or more businesses, merging entities into one operational unit.

Voting Shares

Voting shares are shares of a company's stock that grant the shareholder the right to vote on corporate policy and the composition of the board of directors.

Board of Directors

A group of individuals elected by the shareholders of a company to oversee the management and provide guidance on corporate affairs.