Monopolistic Competition Is Inefficient Because

question 8

Multiple Choice

Monopolistic competition is inefficient because:

• A) firms earn positive economic profits.
• B) the firms' marginal costs and marginal revenues are not equal.
• C) firms have excess capacity in the long run.
• D) entry is difficult.

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Definitions:

Uncertainty-Identity Theory

A social psychological theory suggesting that people join and identify with groups in order to reduce feelings of uncertainty about themselves and the world.

Social Identity Processes

The mechanisms through which individuals develop and maintain their social identity, including categorization, identification, and comparison with other groups.

Uncertainty

Uncertainty involves situations where the outcomes, probabilities, or implications are unclear, often leading to ambiguity and indecision.

Social Mobility Belief System

Belief that intergroup boundaries are permeable. Thus, it is possible for someone to pass from a lower-status into a higher-status group to improve social identity.