A Monopolistic Competitive Firm Is Inefficient Because the Firm

question 81

Multiple Choice

A monopolistic competitive firm is inefficient because the firm:

• A) earns positive economic profit in the long run.
• B) is producing at an output corresponding to the condition that marginal cost equals price.
• C) is not maximizing its profit.
• D) produces an output where average total cost is not minimum.

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Definitions:

18-Month Insurance

This term refers to a prepaid insurance policy that covers a period of 18 months, recognized as an asset initially and expensed over the duration of the coverage.

Weekly Payroll

The total sum of all employee earnings paid on a weekly basis.

Supplies on Account

Supplies purchased by a company on credit, for which payment will be made at a later date, increasing accounts payable.

Historical Cost

The original monetary value of an asset or liability, recorded at the time of its acquisition or incurrence.