The Excess Capacity Theorem Implies That

question 72

Multiple Choice

The excess capacity theorem implies that

• A)consumers would be better off if some monopolistically competitive firms left their markets.
• B)consumers would be better off with more standardization of products.
• C)monopolistic competition benefits society by eliminating excess capacity in production.
• D)monopolistic competition wastes some of society's resources but the elimination of this waste does not necessarily benefit consumers.

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Definitions:

Exclusive Dealing Agreement

A contract between a seller and buyer in which the buyer agrees to purchase all of a particular product from the seller, excluding competitors.

Significant Anticompetitive Effect

Actions or agreements that significantly reduce competition in a market, in violation of antitrust laws.

Clayton Act Violations

Infractions of the Clayton Antitrust Act, a U.S. law designed to prevent anticompetitive practices and promote fair competition in the marketplace.

Conglomerate Merger

A conglomerate merger is the combination of two or more companies engaged in entirely different business activities, usually to diversify product lines and decrease risk.