Efficiency of monopolistically-competitive firms.

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Which of the following statements concerning profit-maximizing firms in long-run equilibrium is true? In a purely competitive market, firms produce a level of output where price is greater than average total cost. In a purely competitive market, firms produce a level of output where price is greater than marginal cost. O In a monopolistically competitive market, firms produce a level of output at which price exceeds the minimum average total cost. In a monopolistically competitive market, firms produce a level of output that exceeds the output where average total cost is minimized.

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Chapter 13, Problem 3RQ

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Efficiency of monopolistically-competitive firms.

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Which of the following statements concerning profit-maximizing firms in long-run equilibrium is true? In a purely competitive market, firms produce a level of output where price is greater than average total cost. In a purely competitive market, firms produce a level of output where price is greater than marginal cost. O In a monopolistically competitive market, firms produce a level of output at which price exceeds the minimum average total cost. In a monopolistically competitive market, firms produce a level of output that exceeds the output where average total cost is minimized.

What did Harvard economist Edward Chamberlin say about the observation that a monopolistically competitive firm's average cost of production exceeds its minimum average total cost? Select one: O a. Chamberlin argued that this belief is incorrect. In his view, monopolistically competitive firms do not produce at a cost above their minimum average total costs. O b. Chamberlin argued that these higher costs represent the wastefulness of this market structure. O c. In Chamberlin's view, this is evidence that monopolistic competition uses society's resources inefficiently and in a fashion that merits government intervention. O d. According to Chamberlin, this cost difference represents the value consumers place on variety and having more choice.

Consider an oligopolistic market with 5 identical firms that choose their profit-maximizing quantities simultaneously. Suppose each firm has constant marginal costs of $123 per unit and the market elasticity of demand is - 1.08. What is the change in the prevailing market price if one additional firm joins the market? Assume that the potential entrant is identical to the incumbent firms. O A. -7.71 O B. - 5.51 O C. -9.92 O D. - 6.89