Asked by Morgan McCord on Jul 13, 2024
Verified
We know that monopolistically competitive firms prevent the efficient use of resources because they produce where
A) P > ATC.
B) P > MC.
C) MR > P.
D) P = MC.
Efficient Use
The optimization of resources to achieve the highest possible output or benefit with the least amount of input or waste.
P > MC
A situation in which price is greater than marginal cost, indicating potential profit opportunities for firms.
- Comprehend the impact of monopolistic competition on resource utilization efficiency.
Verified Answer
NS
Nehel ShaikhJul 16, 2024
Final Answer :
B
Explanation :
Monopolistically competitive firms prevent the efficient use of resources because they produce where the price (P) is greater than the marginal cost (MC) of production. This indicates that the firm is not producing at the point where the price equals the marginal cost, which is considered the condition for allocative efficiency in perfect competition.
Learning Objectives
- Comprehend the impact of monopolistic competition on resource utilization efficiency.