Monopolistically competitive firms ________ because in long-run equilibrium price is ________ marginal cost.A) prevent the efficient use of resources; less thanB) prevent the efficient use of resources; greater thanC) use resources efficiently; greater thanD) use resources efficiently; equal to

Question

Monopolistically competitive firms ________ because in long-run equilibrium price is ________ marginal cost.A)  prevent the efficient use of resources; less thanB)  prevent the efficient use of resources; greater thanC)  use resources efficiently; greater thanD)  use resources efficiently; equal to

Sharon Celesta · Accepted Answer

Final Answer : B, Explanation :  In monopolistic competition, firms have some control over price because they sell differentiated products. This leads to a situation where, in the long run, price is greater than marginal cost, indicating an inefficient allocation of resources. This is because, in a perfectly competitive market, price equals marginal cost in long-run equilibrium, reflecting an efficient use of resources.

Monopolistically competitive firms because in long-run equilibrium price is marginal cost.

A) prevent the efficient use of resources; less than
B) prevent the efficient use of resources; greater than
C) use resources efficiently; greater than
D) use resources efficiently; equal to

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