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Refer to Figure 26

Question 68

Multiple Choice

Refer to Figure 26.3 for a monopolistically competitive firm in the long run.Which of the following observations results in the problem of excess capacity? A) The firm is producing less than the minimum-ATC output rate. B) The firm is producing at Q<sub>3</sub> instead of where MR = MC. C) The firm is earning only zero economic profits in the long run. D) The firm is producing at Q<sub>1</sub> instead of where MC = demand. Refer to Figure 26.3 for a monopolistically competitive firm in the long run.Which of the following observations results in the problem of excess capacity?


A) The firm is producing less than the minimum-ATC output rate.
B) The firm is producing at Q3 instead of where MR = MC.
C) The firm is earning only zero economic profits in the long run.
D) The firm is producing at Q1 instead of where MC = demand.

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