Economists Have Long Debated Whether There Is a Significant Loss

question 223

Multiple Choice

Economists have long debated whether there is a significant loss of well-being to society in markets that are monopolistically competitive rather than perfectly competitive.Which of the following offers the best reason why some economists believe that monopolistically competitive markets are less efficient than perfectly competitive markets?

• A)In contrast to perfectly competitive markets, neither allocative efficiency nor productive efficiency are achieved in monopolistically competitive markets.
• B)In contrast to perfectly competitive markets, firms in monopolistically competitive markets earn economic profits in long-run equilibrium.
• C)In contrast to perfectly competitive markets, firms in monopolistically competitive markets do not produce where price equals average total cost in long-run equilibrium.
• D)In contrast to perfectly competitive markets, firms in monopolistically competitive markets can charge a price greater than average total cost in the short run.

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Definitions:

Terrestrial Biomes

Terrestrial biomes are large ecological zones on Earth's surface, with distinct climates and ecosystems, such as forests, deserts, and grasslands, characterized by the vegetation and animal life adapted to them.

Rocky Shore Zone

A coastal area where solid rock predominates, often featuring tide pools, and providing diverse habitats for marine life.

Anemones

Marine or freshwater polyps that belong to the phylum Cnidaria, characterized by their colorful appearance and a ring of tentacles surrounding a central mouth.

Euphotic Zone

The layer of a body of water that is sufficiently lit by sunlight, allowing photosynthesis by aquatic plants and phytoplankton.