Which of the Following Real-World Situations Is the Result of Excess

question 127

Multiple Choice

Which of the following real-world situations is the result of excess capacity in a monopolistically competitive market?

• A)A factory producing women's clothing produces more than it can sell during a season.
• B)Gas stations with infrequently used pumps are located at all four corners of an intersection.
• C)A retail auto tire store orders too much inventory.
• D)Monopolistically competitive firms do not exist in the real world.

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Definitions:

Accepted

Acknowledged or approved, typically in the context of an agreement or transaction.

Discount Rate

The discount rate is the interest rate used in discounted cash flow (DCF) analysis to present value future cash flows and assess the attractiveness of an investment.

Net Present Value

An approach to determining the value of an investment by discounting future cash flows to their present value.

Cash Flows

The total amount of money being transferred into and out of a business, particularly regarding calculating its operating, investing, and financing activities.