question
One source of inefficiency in monopolistic competition is that
answer
because price is above marginal cost, some units are not produced that buyers value in excess of the cost of production and this causes a deadweight loss.
question
Which of the following is true with regard to monopolistically competitive firms' scale of production and pricing decisions? Monopolistically competitive firms produce
answer
with excess capacity and charge a price above marginal cost.
question
The monopolistically competitive market shown in Exhibit will, in the long run,
answer
cause producers to exit the market, which will shift the demand faced by incumbent firms to the right.
question
Which of the following firms has the least incentive to advertise?
answer
a wholesaler of crude oil
question
Which of the following is true regarding the similarities and differences in monopolistic competition and monopoly?
answer
The monopolist makes economic profits in the long run while the monopolistic competitor makes zero economic profits in the long run.
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