With regard to the long- run equilibrium in the two market structures, the higher unit costs in monopolistic competition relative to perfect competition implies that
A) resources are being used inefficiently in perfect competition.
B) the government should force monopolistically competitive firms to behave like perfectly competitive firms.
C) there is a tradeoff between product variety and the ability to minimize cost per unit.
D) firms are restricting output to extract positive economic profits.
E) society would be better off if there were fewer, and more homogeneous, goods produced at the scale at which average costs are minimized.
Correct Answer:
Verified
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A) allows