-In the long run, firms in monopolistic competition produce at a level that is ________ the efficient scale of output.
A) not comparable to
B) less than
C) equal to
D) more than
E) All of the above are possible depending on market conditions.

Question

-In the long run, firms in monopolistic competition produce at a level that is ________ the efficient scale of output.
A) not comparable to 
B) less than 
C) equal to 
D) more than 
E) All of the above are possible depending on market conditions.

Quizplus · Accepted Answer

In the long run, firms in monopolistic competition produce at a level that is less than the efficient scale of output because they face downward-sloping demand curves and have excess capacity. This means they do not produce where average total cost is minimized, which is the efficient scale of output.

-In the Long Run, Firms in Monopolistic Competition Produce at a Level