Monopolistic competition is characterized by excess capacity because
A. firms charge a price that is greater than marginal cost.
B. firms produce at an output level less than the least-cost output.
C. firms are always profitable in the long run.
D. the demand for a product is perfectly elastic in this type of industry.
Answer: B
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If a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25, the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week
The demand for slices of pizza is ________ and the total revenue received by this Pizza Hut ________. A) elastic; decreases B) inelastic; decreases C) elastic; increases D) inelastic; increases E) unit elastic; does not change
When the U.S. price level decreases, we would expect a:
A. movement down along the aggregate demand curve. B. shift straight up of the aggregate demand curve. C. shift to the right of the aggregate demand curve. D. movement up along the aggregate supply curve.
A university offers a free shuttle service around campus. The opportunity cost of the shuttle service to the university is equal to: a. zero, since it is free to students who want to ride
b. the wages paid to the shuttle drivers. c. the wages paid to the shuttle drivers, plus the gasoline expenses. d. the highest valued alternative use of the resources devoted to the shuttle program.
A decrease in the demand for musicians ________ the number of musicians employed, and ________ the wages paid to musicians.
A. increases; increases B. increases; decreases C. decreases; increases D. decreases; decreases