The Diagram Below Shows Demand and Cost Curves for a Monopolistically

question 107

Multiple Choice

The diagram below shows demand and cost curves for a monopolistically competitive firm. FIGURE 11-3
-Refer to Figure 11-3.A monopolistically competitive firm is allocatively inefficient because in the long-run equilibrium

• A)LRAC is not at its minimum.
• B)MC is greater than price.
• C)price is greater than MC at Q₁.
• D)price is greater than LRAC at Q₁.
• E)None of the above - the long-run equilibrium is allocatively efficient.

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