In the Long Run, a Monopolistically Competitive Firm Produces with Excess

question 86

Multiple Choice

In the long run, a monopolistically competitive firm produces with excess capacity because the

• A)firm is producing too much output to maximize profit.
• B)firm does not produce at the point at which marginal cost is minimized.
• C)long-run output level occurs at the point at which average total cost is falling.
• D)firm could produce more and reduce average fixed cost.
• E)firm fails to minimize average fixed costs.

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Definitions:

Aggregate Consumption

Aggregate consumption is the total amount of goods and services consumed in an economy, reflecting overall consumer spending.

Consumption Function

An economic formula representing the functional relationship between total consumption and gross national income.

Aggregate Income

The total income earned by all individuals and entities within an economy.

Aggregate Consumption

The total amount of goods and services consumed in an economy within a given period.