-Refer to Figure 9 -9

Multiple Choice

-Refer to Figure 9 -9. The diagram demonstrates that

A) it is not possible for a monopolistic competitor to produce the productively efficient output level, Q_a, because of product differentiation.
B) it is possible for a monopolistic competitor to produce the productively efficient output level, Q_a, , if it is willing to lower its price from P_b to P_a.
C) in the long run the monopolistic competitor produces the minimum cost output level, Q_a, but in the short run its output of Q_b is not cost minimizing.
D) in the short run the monopolistic competitor produces an output Q_b but in the long run after it adjusts its capacity, it will produce run the allocatively efficient output, Q_a.