Suppose That an Economy Wants to Eliminate the Resource Waste

question 53

Multiple Choice

Suppose that an economy wants to eliminate the resource waste associated with excess capacity in monopolistically competitive markets.Which of the following would achieve this goal?

• A)Firms are allowed to establish significant barriers to entry.
• B)Firms are encouraged to produce less output.
• C)Firms are required to set price equal to marginal cost.
• D)Firms are required to charge the same price.

---

Definitions:

Tone-Deaf

A term often used to describe a person's poor ability to distinguish musical notes or remain in tune while singing.

Detecting Changes

The process of identifying differences or modifications in conditions, situations, or variables over time.

Low-Frequency

Referring to something that occurs or is present at small or infrequent intervals; in physics, it relates to waves with relatively long wavelengths.

Basilar Membrane

The membrane within the cochlea of the inner ear that vibrates in response to sound, playing a critical role in hearing.