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:

Critical Value

A point on the scale of the test statistic beyond which we reject the null hypothesis; it depends on the chosen significance level.

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true, usually set before the experiment.

Seat Belts

Devices aimed at protecting vehicle passengers from injurious motions that might occur in the event of an accident or abrupt halt.

Chi-Squared Test

A statistical test used to determine if there's a significant difference between the observed frequencies and the expected frequencies in one or more categories.