The diagram below shows demand and cost curves for a monopolistically competitive firm.
FIGURE 11- 3
-Refer to Figure 11- 3.A monopolistically competitive firm is allocatively inefficient because in the long- run equilibrium
A) MC is greater than price.
B) LRAC is not at its minimum.
C) price is greater than LRAC at Q1.
D) price is greater than MC at Q1.
E) None of the above - the long- run equilibrium is allocatively efficient.
Correct Answer:
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