If a Monopolistically Competitive Firm Has Excess Capacity

question 252

Multiple Choice

If a monopolistically competitive firm has excess capacity,

• A) it has exhausted all economies of scale.
• B) it is producing beyond the minimum efficient scale.
• C) it is experiencing diseconomies of scale.
• D) it produces an output rate that places it on the negatively sloped portion of its average total cost curve.

---

Definitions:

Performance

The act or process of carrying out an action or accomplishing a task or function.

Objective Standards

Unbiased and universally accepted criteria or measures used to evaluate or judge something.

Self-perception Theory

A psychological theory proposing that individuals infer their own attitudes and emotions by observing their behavior and the context in which it occurs.

Central Proposition

A fundamental principle or idea that is central to and supports a theory, argument, or belief system.