In Contrast with Perfect Competition, Excess Capacity Characterizes Monopolistic Competition

question 249

Multiple Choice

In contrast with perfect competition, excess capacity characterizes monopolistic competition.Excess capacity is due to which of the following?

• A)Monopolistically competitive firms produce at the minimum point on their average total cost curves.
• B)Monopolistically competitive firms face downward-sloping demand curves. In the long run, firms produce where their demand curves are tangent to their long-run average total cost curves.
• C)Monopolistically competitive firms produce where marginal revenue is equal to marginal cost.
• D)Monopolistically competitive markets have low barriers to entry.

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Definitions:

Smart Cards

Plastic cards embedded with a microprocessor chip, which can store and process data, used for various applications like credit cards and identity verification.

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Prepaid payment cards where a monetary value is stored on the card itself, not in an external account.

Microchips

Small semiconductor devices that contain integrated circuits, used in a variety of electronic equipments and devices.

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The illegal creation or alteration of a document with the intent to deceive.