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Author Question: Why do firms in monopolistic competition operate with excess capacity? What will be an ideal ... (Read 121 times)

bobbie

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on: Jun 29, 2018
Why do firms in monopolistic competition operate with excess capacity?
 
  What will be an ideal response?

Question 2

What is autarky?
 
  What will be an ideal response?


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Carliemb17

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Reply #1 on: Jun 29, 2018
Answer to Question 1

A firm's capacity output is the output at which average total cost is at its minimum. In monopolistic competition in the long run, MR = MC and P = ATC. At the long run equilibrium, it is the case that MC < ATC, which means that ATC is falling in this range and so production occurs at an output level that is less than capacity output.

Answer to Question 2

Autarky is a situation in which a country does not trade with other countries.


bobbie

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Reply 2 on: Jun 29, 2018
YES! Correct, THANKS for helping me on my review

cassie_ragen

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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