Question

Which of the following statements is incorrect regarding monopolistic competition?

A No excess capacity with Price = AC Correct Answer Incorrect Answer
B In case of monopolistic competition, there are only normal profits in the long run and there is no excess capacity. Correct Answer Incorrect Answer
C LMC=LAC at the minimum point of the latter Correct Answer Incorrect Answer
D Consumer surplus reduces Correct Answer Incorrect Answer
E None of these Correct Answer Incorrect Answer

Solution

In case of monopolistic competition, there are only normal profits in the long run but there is excess capacity.

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