Is monopolistic competition efficient? Explain. What is Edward Chamberlin's view about the efficiency of monopolistic competition?
What will be an ideal response?
Monopolistic competition is not efficient because a monopolistic competitive firm produces where price exceeds marginal cost and because in the long run a monopolistically competitive firm produces to the point at which average total cost is above minimum point of its average total cost curve. However, Chamberlin argued that the difference between the average cost of production for a monopolistic competitor and the minimum of average total cost represented the cost of producing differentiated products, which consumers value.
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The circular flow diagram shows only the aggregate expenditures measure of GDP
Indicate whether the statement is true or false
Every economy must ration goods in some way because of
a. overpopulation. b. poorly-performing markets. c. the income gap between rich and poor. d. scarcity.
On a supply-and-demand diagram, consider a price for which the horizontal distance to the supply curve is shorter than the horizontal distance to the demand curve. There is a __________ at that price and the current price must be __________ the equilibrium price
A) shortage; above B) shortage; below C) surplus; above D) surplus; below
Which is an example of the government command approach?
A. Fast-food franchise growth B. Public schools C. Private college education D. The growth of community banks