Which is true of monopolistic competition?
A.
Firms earn long-run economic profits.
B.
\(P=\mathrm{MR}=\mathrm{MC}=\) ATC.
C.
Firms spend money to differentiate and advertise their products.
D.
In the long run the market is allocatively efficient.
E.
Excess capacity is eliminated in the long run.
Exam No： AP Micro Practice Test 4 Year：2024 Question No：42
Answer:
C
Knowledge points:
3.6 Firms’ Short-Run Decisions to Produce and Long-Run Decisions to Enter or Exit a Market
4.1 Introduction to Imperfectly Competitive Markets
4.4 Monopolistic Competition
Solution:
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