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Maech Sanicolas
on Dec 05, 2024

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Toby operates a small deli downtown.The deli industry is monopolistically competitive.Toby,along with every other deli in town,is producing the quantity that minimizes average total cost.Assuming the delis are maximizing profits,the:

A) number of delis will eventually decrease.
B) number of delis will eventually increase.
C) delis' prices equal their average total costs.
D) delis have excess capacity.

Monopolistically Competitive

A market structure where many firms sell products that are similar but not identical, allowing for some degree of market power and differentiated competition.

Excess Capacity

The failure to produce enough to minimize average total cost; characteristic of monopolistically competitive firms.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the total quantity produced.

  • Explain the concept of excess capacity in monopolistically competitive markets.
  • Analyze the implications of different demand and cost conditions on a firm’s pricing and output decisions.
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Sharna AyresDec 07, 2024
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