Question

In the long run, monopolistically competitive firms: Group of answer choices charge prices equal to marginal cost have excess capacity produce at the minimum of average total cost have excess capacity and produce at the minimum of average total cost

Answer 1

have excess capacity

Step-by-step explanation:

As we know that in the case of monopolistically competitive firms, the output produced is less efficient as compared to the other market in the long run

Also

P = ATC

But

ATC > ATC or ATC > MC

This ATC > MC arise when there are differentiated products due to which the demand curve is downward sloping

Hence, the second option is correct