Which of the Following Best Describes the Idea of Excess

question 161

Multiple Choice

Which of the following best describes the idea of excess capacity in monopolistic competition?

• A)Firms produce more output than is socially desirable.
• B)The output produced by a typical firm is less than what would occur at the minimum point on its ATC curve.
• C)Due to product differentiation, firms choose output levels where P > ATC.
• D)Firms keep some surplus output on hand in case there is a shift in the demand for their product.

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Definitions:

Company Growth

Refers to the increase in size, revenue, or market share of a company over time.

Ceteris Paribus

A term from Latin that signifies "with all other factors remaining the same," employed in the field of economics to examine the impact of a single variable by keeping the rest unchanged.

Plowback Ratio

The proportion of earnings retained by a company after dividends have been paid out to shareholders.

Low-investment-rate Plan

A strategy or plan offering lower returns on investments, typically associated with lower risk or short-term investment horizons.