In Long-Run Equilibrium in Monopolistic Competition

question 236

Multiple Choice

In long-run equilibrium in monopolistic competition:

• A) price is greater than average total cost.
• B) price is equal to average total cost at an output below where average total cost is minimized.
• C) price is equal to average total cost at its minimum.
• D) price is equal to average total cost at an output above where average total cost is minimized.

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Definitions:

Policy Makers

Individuals or groups responsible for making decisions and establishing regulations that guide the operation of governments and organizations.

Inflationary Expectations

The beliefs that consumers, businesses, and investors have about future inflation rates, which can influence economic behavior and policy decisions.

Discretionary Policy

Involves government policies that are implemented through ad-hoc decisions by policymakers, rather than set by predetermined rules.

Monetary Policy

The process by which the central bank or monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.