Which of the Following Statements Is Correct Concerning a Typical

question 124

Multiple Choice

Which of the following statements is correct concerning a typical firm operating under conditions of monopolistic competition in the long run?

• A)Excess capacity is lowered as demand becomes less elastic.
• B)It operates on the rising portion of its average cost curve because of excess capacity.
• C)The greater the product differentiation the lower will be the amount of excess capacity.
• D)None of the choices are correct.

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Definitions:

Discount Rate

The rate at which the Federal Reserve lends money to financial institutions through its discount window.

Bond Prices

The market price at which a bond is traded, influenced by factors such as interest rates, the credit rating of the issuer, and the bond's maturity period.

Interest Rates

The share of a loan attributed to interest charges to the borrower, regularly described as an annual percentage of the remaining loan balance.

Thrift Institutions

Financial institutions, such as savings banks and credit unions, that primarily accept savings deposits and make loans to consumers.