The Diagram Below Shows Selected Cost and Revenue Curves for a Firm

Multiple Choice

The diagram below shows selected cost and revenue curves for a firm in a monopolistically competitive industry. FIGURE 11-4
-Refer to Figure 11-4.How is the excess-capacity theorem demonstrated in this diagram?

A) The short-run equilibrium occurs where the firm is producing output at ,which is less than that corresponding to the lowest point on its LRAC curve.
B) The long-run equilibrium occurs where the firm is producing output at ,which is the same as for a perfectly competitive industry.
C) In long-run equilibrium the firm is earning positive profits,but has unexploited economies of scale.
D) In long-run equilibrium,this firm has excess capacity because they are selling output at a price below their LRAC.
E) The long-run equilibrium occurs where the firm is producing output at ,which is less than that corresponding to the lowest point on its LRAC curve.