[Solved] What Does Excess Capacity Mean

What is true about both perfectly competitive and monopolistically competitive firms in long-run equilibrium? A)They produce at minimum average cost. B)They earn economic profits. C)They achieve allocative efficiency. D)They achieve productive efficiency. E)They equate marginal cost and marginal revenue.

Which of the following statements concerning a monopolistically competitive industry is correct? A)If there are short-run losses,firms will exit from the industry and the demand of the remaining firms will decrease. B)If there are short-run losses,firms will exit from the industry and the demand of the remaining firms will increase. C)If there are short-run profits,firms will exit from the industry and the demand of the remaining firms will increase. D)If there are short-run profits,firms will enter the industry and the demand of the remaining firms will increase.

How are a typical monopolistically competitive firm and a typical perfectly competitive firm alike? A)Both face perfectly elastic demand. B)Both experience zero economic profits in the long run. C)Both achieve allocative efficiency only. D)Both achieve productive efficiency only. E)Both achieve allocative and productive efficiency.

Which of the following statements is correct concerning a typical firm operating under conditions of monopolistic competition in the long run? A)Excess capacity is lowered as demand becomes less elastic. B)It operates on the rising portion of its average cost curve because of excess capacity. C)The greater the product differentiation the lower will be the amount of excess capacity. D)None of the choices are correct.

Why is it impossible for a monopolistically competitive firm to achieve productive efficiency? A)All monopolistically competitive firms are too small. B)All monopolistically competitive firms make economic profits. C)The market demand curve is perfectly elastic. D)The firm's demand curve is not perfectly elastic. E)The firm's marginal cost curve is upward-sloping.

What is the root cause of excess capacity in a monopolistically competitive industry? A)Inefficient producers. B)Product differentiation. C)Free entry. D)Rising marginal cost.

All of the following,except one,are benefits of product differentiation.Which is the exception? A)There is a wide variety of products for consumers to choice from. B)There are a large number of sellers from which consumers can choose. C)Goods are produced at the minimum average cost. D)Consumers benefit in terms of the locations and hours of operation of sellers.

Below are data for a monopolistically competitive firm. -Refer to the information above to answer this question.What output will this profit-maximizing firm produce? A)3. B)4. C)5. D)6. E)7.

Below are data for a monopolistically competitive firm. -Refer to the information above to answer this question.What is true if the firm is producing at the profit-maximizing output? A)It is producing at economic capacity B)It is achieving allocative efficiency. C)It is achieving both economic and allocative efficiency D)It is experiencing excess capacity

Suppose that it requires a special license in order to operate a firm in a certain type of industry.In addition,suppose that firms that hold such licenses are able to sell them for a high price.Which of the following statements is true? A)The firms in this industry must all be franchised. B)This is a typical monopolistically competitive market in which there are no economic profits in the long run. C)The government that issued the original licenses will be willing to issue more. D)There is free entry by new firms into this industry. E)Most firms currently in the industry are earning economic profits.