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:

Houses

Structures used as living quarters for one or more persons, typically families.

Diminishing Marginal Product

The principle stating that as additional units of a variable input are added to a fixed input, the additional output from each new unit of input will eventually decrease.

Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced.

Variable Cost

Expenses that shift in proportion to the amount of production or output.