In monopolistic competition there is an underallocation of resources at the profit-maximizing level of output,which means that:
A) minimum ATC is less than MC.
B) minimum ATC is less than MR.
C) price is greater than minimum ATC.
D) price is greater than MC.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms have some market power, allowing them to set prices above marginal cost (MC), leading to an underallocation of resources.

In Monopolistic Competition There Is an Underallocation of Resources at the Profit-Maximizing