The Excess Capacity Theorem States That a Monopolistic Competitor

question 133

Multiple Choice

The excess capacity theorem states that a monopolistic competitor

• A)will produce an output level smaller than the one that would minimize its unit costs.
• B)will produce an output level where MR > MC.
• C)generally does not attain long run equilibrium, and thus charges a higher price than it should.
• D)typically produces too much of a good at too low a quality.

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