A monopolistically competitive firm has excess capacity because ...

[sabina]

A monopolistically competitive firm has excess capacity because in the
 
  A) short run its MR exceeds its MC.
  B) short run its ATC is less than its AVC.
  C) long run its ATC exceeds its minimum ATC.
  D) long run it makes an economic profit.

Question 2

If marginal cost exceeds average variable cost but is less than average total cost, then as output increases average total cost ________ and average variable cost ________.
 
  A) increases; decreases
  B) decreases; decreases
  C) increases; increases
  D) decreases; increases

[nickk12214]

Answer to Question 1

C

Answer to Question 2

D