The Diagram Below Shows Demand and Cost Curves for a Monopolistically

question 18

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 allocatively inefficient because in the long- run equilibrium

• A) price is greater than LRAC at QL.
• B) price is greater than MC at QL.
• C) MC is greater than price.
• D) LRAC is not at its minimum.
• E) none of the above -- the long- run equilibrium is allocatively efficient.

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