?

AP® Microeconomics

Free Version

Upgrade subject to access all content

Moderate

Monopolistic competition: Excess Capacity

APMICR-QZG4Z9

Which of the following statements correctly describe why monopolistically competitive firms produce with excess capacity?

I. They produce at an output where marginal cost is less than minimum average total cost.
II. They produce at an output where price is greater than marginal cost​.
III. They can minimize their average costs by increasing their output.
IV. They charge a price that exceeds their marginal revenue.

A

I and II only

B

I and III only

C

II and III only

D

II and IV only

E

III and IV only