Does the Monopolistic Competitive Firm Exhibit Resource-Allocative Efficiency

question 84

Multiple Choice

Does the monopolistic competitive firm exhibit resource-allocative efficiency?

• A)No, because at its chosen quantity of output, price does not equal the lowest possible average total cost.
• B)Yes, because at its chosen quantity of output, price equals marginal cost.
• C)No, because at its chosen quantity of output, price is greater than marginal cost.
• D)Yes, because at its chosen quantity of output, price is less than marginal cost.

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Definitions:

Security Guard

A person employed to protect property, assets, or people.

Nash Equilibrium

A concept in game theory where no participant can gain by changing strategies if the other participants remain unchanged.

John Nash

An American mathematician known for his pioneering work in game theory, and the Nobel laureate in Economic Sciences.

Nash Equilibrium

A concept in game theory where each player's strategy is optimal given the strategies of all other players, and no player has anything to gain by changing only their own strategy.