Is a monopolistically competitive firm productively efficient?
A)No, because it does not produce at minimum average total cost.
B)Yes, because it produces where marginal cost equals marginal revenue.
C)No, because price is greater than marginal cost.
D)Yes, because price equals average total cost.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms may generate excess capacity and not produce at minimum average total cost. Therefore, they are not productively efficient.

Is a Monopolistically Competitive Firm Productively Efficient