The diagram below shows demand and cost curves for a monopolistically competitive firm. Dollars per unit P₁ P₂ Q₁ FIGURE 11-3 E₂ 0₂ MR MC LRAC Demand Output Refer to Figure 11-3. This monopolistically competitive firm is allocatively inefficient because in long-run equilibrium, OA) MC is greater than price. OB) price is greater than MC at Q1. OC) LRAC is not at its minimum. OD) price is greater than LRAC at Q1. OE) None of the above - the long-run equilibrium is allocatively efficient.
The diagram below shows demand and cost curves for a monopolistically competitive firm. Dollars per unit P₁ P₂ Q₁ FIGURE 11-3 E₂ 0₂ MR MC LRAC Demand Output Refer to Figure 11-3. This monopolistically competitive firm is allocatively inefficient because in long-run equilibrium, OA) MC is greater than price. OB) price is greater than MC at Q1. OC) LRAC is not at its minimum. OD) price is greater than LRAC at Q1. OE) None of the above - the long-run equilibrium is allocatively efficient.
Chapter14: Monopolistic Competition And Product Differentiation
Section: Chapter Questions
Problem 10P
Related questions
Question
![The diagram below shows demand and cost curves for a
monopolistically competitive firm.
Dollars per unit
P₁
P₂-
E₁
Q₁
FIGURE 11-3
Q₂
MR
MC
LRAC
Demand
Output
Refer to Figure 11-3. This monopolistically competitive firm is
allocatively inefficient because in long-run equilibrium,
OA) MC is greater than price.
OB) price is greater than MC at Q1.
OC) LRAC is not at its minimum.
OD) price is greater than LRAC at Q1.
OE) None of the above - the long-run equilibrium is allocatively
efficient.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F076750d6-6ed7-4f9e-b456-7c4a7484d547%2F632a7a84-d7ea-4789-ab38-8d28afe2653a%2F46q4o3b_processed.png&w=3840&q=75)
Transcribed Image Text:The diagram below shows demand and cost curves for a
monopolistically competitive firm.
Dollars per unit
P₁
P₂-
E₁
Q₁
FIGURE 11-3
Q₂
MR
MC
LRAC
Demand
Output
Refer to Figure 11-3. This monopolistically competitive firm is
allocatively inefficient because in long-run equilibrium,
OA) MC is greater than price.
OB) price is greater than MC at Q1.
OC) LRAC is not at its minimum.
OD) price is greater than LRAC at Q1.
OE) None of the above - the long-run equilibrium is allocatively
efficient.
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