In Contrast with Perfect Competition, Excess Capacity Characterises Monopolistic Competition

question 100

Multiple Choice

In contrast with perfect competition, excess capacity characterises 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:

Heuristic

A simple thinking strategy that often allows us to make judgments and solve problems efficiently; usually speedier but also more error-prone than algorithms.

Heuristics

Mental shortcuts or rules of thumb that simplify decision making, often used in problem-solving and judgment situations.

Algorithms

Step-by-step procedures or formulas for solving problems or completing tasks, often used in mathematics and computer science.

Overconfidence Phenomenon

The tendency for an individual to overestimate their abilities, performance, level of control, or chance of success.