Question

Monopolistically competitive firms do not achieve allocative efficiency because the _____. Multiple choice question. price for a monopolistically competitive firm is lower than the average cost output produced is less than optimal and consumers pay a lower than competitive price, causing inefficient use of resources for society output produced is more than optimal and consumers pay a lower than competitive price, causing inefficient use of resources for society price for a monopolistically competitive firm exceeds the marginal cost

Answer 1

price for a monopolistically competitive firm exceeds the marginal cost

Step-by-step explanation:

Monopolistically competitive firms do not achieve allocative efficiency because the "price for a monopolistically competitive firm exceeds the marginal cost"

Allocative efficiency is known to be an economic concept which actually regards efficiency at the societal level. This usually refers to the production of the optimal quantity of some output. The quantity produced is actually the marginal benefit of one more unit which the society enjoys and which is equal to the marginal cost.

In a monopolistically competitive industry, they will produce a lower quantity of a good and then their prices will be higher than would a perfectly competitive industry. A monopolistic competitive firm’s demand curve actually slopes downward. This then means that it will charge a price that exceeds marginal costs.