Which of the following statements best describes the outcome under monopolistic competition?
AIt is efficient because entry is free and economic profits are eliminated in the long run.
BIt is efficient because the right amount of output is produced, but not efficient in that the output produced is produced at a cost above minimum average total cost
CIt is not efficient because too little output is produced but is efficient in that the output produced is produced at minimum average total cost.
DIt is not efficient because too little output is produced and the output that is produced is produced at a cost above minimum average total cost
Correct answer
D. It is not efficient because too little output is produced and the output that is produced is produced at a cost above minimum average total cost
Explanation
The correct answer is It is not efficient because too little output is produced and the output that is produced is produced at a cost above minimum average total cost.