Economists Have Long Debated Whether There Is a Significant Loss

question 223

Multiple Choice

Economists have long debated whether there is a significant loss of well-being to society in markets that are monopolistically competitive rather than perfectly competitive.Which of the following offers the best reason why some economists believe that monopolistically competitive markets are less efficient than perfectly competitive markets?

• A)In contrast to perfectly competitive markets, neither allocative efficiency nor productive efficiency are achieved in monopolistically competitive markets.
• B)In contrast to perfectly competitive markets, firms in monopolistically competitive markets earn economic profits in long-run equilibrium.
• C)In contrast to perfectly competitive markets, firms in monopolistically competitive markets do not produce where price equals average total cost in long-run equilibrium.
• D)In contrast to perfectly competitive markets, firms in monopolistically competitive markets can charge a price greater than average total cost in the short run.

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Definitions:

Lifespan Development

The field of study that examines patterns of growth, change, and stability in behavior that occur throughout the entire life span.

Scientific Evidence

Information and data that serve to either support or counter scientific hypotheses or theories, derived from scientific methods.

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A concept in Bronfenbrenner's ecological systems theory referring to the interconnections between different microsystems in an individual's life.