Question

Q. 15

In a specific market, a _________ occurs when the quantity demanded is below the quantity at the lowest point of the long run average total cost curve.

Group of answer choices

a. natural monopoly

b. monopoly

c. monopolistic competition

d. oligopoly

Q.16

The demand curve faced by a company in a market characterized as perfectly competitive

Group of answer choices

a. shows diseconomies of scale over a large range of output

b. shows economies of scale over a large range of output

c. all of the above

d. is horizontal

Answer 1

Q.15

The monopolistic competitive firm is characterized by having Excess Capacity. There is always underutilization of available resources and the firm operates to the left of Minimum Efficient Scale (MES). MES occurs at the lowest point of Average Cost curve.

So, for the monopolistic competitive firm, the quantity demanded is below the quantity at the lowest point of LRAC Curve

Option c. is correct

Q. 16

In a perfectly competitive market, the demand curve AR Curve is horizontal and is independent of the changes in the quantity demanded or produced.

Each firm is the price taker and therefore, P = AR = MR is the horizontal demand curve.

Option d. is correct

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