A Monopolistically Competitive Firm Has Excess Capacity in the Long

question 219

Multiple Choice

A monopolistically competitive firm has excess capacity in the long run.This means that it:

• A)produces less than the output at which average total costs are minimized.
• B)produces less than the output at which price and marginal cost are equal.
• C)could produce more by moving to a larger plant.
• D)doesn't maximize profits.

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Definitions:

Maintenance Costs

Expenses incurred to keep an asset in good condition and/or repair damage during a period.

Paid Admissions

Revenue generated from the sale of tickets or entry fees.

Budgeting

Budgeting involves planning income and expenditure for a specific period, helping organizations allocate resources efficiently.

Relevant Range

The range of activity within which the assumptions about fixed and variable costs are valid.