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:

Treasury Bonds

Long-term investment instruments issued by the government that pay periodic interest until expiration, at which point the face value is paid to the investor.

Treasury Bills

Short-term government securities issued at a discount from par value and mature without interest payments, offering a return upon maturity.

Real Rate of Return

The rate of return on an investment after adjusting for inflation, representing the actual purchasing power of the investment's earnings.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values diverge from the mean.