question 32\nmonopolistically competitive firms experience excess capacity in long - run equilibrium…

question 32\nmonopolistically competitive firms experience excess capacity in long - run equilibrium because\na) the firms tend to overproduce products and create a surplus\nb) the firms restrict output in order to increase prices\nc) the government places price floors to help these firms\nd) these firms limit production in order to avoid government regulation\ne) low prices in the market result in consistent product shortages

question 32\nmonopolistically competitive firms experience excess capacity in long - run equilibrium because\na) the firms tend to overproduce products and create a surplus\nb) the firms restrict output in order to increase prices\nc) the government places price floors to help these firms\nd) these firms limit production in order to avoid government regulation\ne) low prices in the market result in consistent product shortages

Answer

Brief Explanations:

Monopolistically competitive firms have excess capacity in long - run equilibrium as they restrict output to increase prices and maximize profits. They operate at a point where marginal revenue equals marginal cost, which is less than the output at minimum average total cost.

Answer:

B. the firms restrict output in order to increase prices