It Has Been Argued That Because the Monopolistic Competitive Firm

question 96

Multiple Choice

It has been argued that because the monopolistic competitive firm faces a downward-sloping demand curve, in long run equilibrium it

• A)overutilizes its plant size.
• B)has excess capacity.
• C)produces an output greater than the one that would minimize its costs of production.
• D)always earns an economic profit.

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Definitions:

Convertible

Refers to a security, usually a bond or a preferred stock, that can be converted into a specified number of shares of common stock.

Common Stock

A type of security that signifies ownership in a corporation, entitling the shareholder to a share of the corporation's profits and assets.

Consolidated Earnings Per Share

A calculation of the earnings per share of a parent company and its subsidiaries, providing a measure of the combined profitability on a per-share basis.

Convertible Securities

Convertible securities are financial instruments, like bonds or preferred stocks, that can be converted into a predetermined number of the issuer's equity shares.