Monopolistically competitive firms do not achieve productive efficiency because
A)entry of firms raises production costs in the long run
B)barriers to entry allow profit to be earned in the long run
C)price is greater than marginal cost at the profit maximizing output level
D)profit is maximized at a quantity where average total cost is not minimized
E)there is no threat of entry in the long run

Question

Quizplus · Accepted Answer

Monopolistically competitive firms do not achieve productive efficiency because they produce at a level where average total cost is not minimized, meaning they do not produce at the lowest point on the average total cost curve.

Monopolistically Competitive Firms Do Not Achieve Productive Efficiency Because