Which of the following is true about production in an imperfectly competitive market?

Choose 1 answer:
(A) The amount produced is the same as in perfect competition.
(B) More is produced than is socially optimal.
(c) The amount produced minimizes marginal cost.
(D) Less is produced than is socially optimal.
(E) The amount produced minimizes average total cost.

Question

Which of the following is true about production in an imperfectly competitive market?

Choose 1 answer:
(A) The amount produced is the same as in perfect competition.
(B) More is produced than is socially optimal.
(c) The amount produced minimizes marginal cost.
(D) Less is produced than is socially optimal.
(E) The amount produced minimizes average total cost.

Accepted Answer

∻Solution∻ ‖ a ⋮ Imperfect Competition Characteristics: In imperfectly competitive markets, firms have some control over the price of their products and face a downward-sloping demand curve. ‖ ‖ b ⋮ Socially Optimal Output: Socially optimal output is achieved when the price equals the marginal cost ($P = MC$), which is typically not the case in imperfectly competitive markets. ‖ ‖ c ⋮ Production in Imperfect Competition: Firms in imperfectly competitive markets produce less than the socially optimal output level because they restrict output to increase prices and maximize profits. ‖ ∻Answer∻ ⚹ (D) Less is produced than is socially optimal. ⚹ ∻Key Concept∻ ⚹ Imperfect Competition and Socially Optimal Output ⚹ ∻Explanation∻ ⚹ In imperfectly competitive markets, firms do not produce the socially optimal output level; instead, they produce less to maximize profits, resulting in a lower quantity than what would be produced in a perfectly competitive market or at the socially optimal point where $P = MC$.◊How does production in an imperfectly competitive market differ from production in a perfectly competitive market in terms of quantity produced?⍭ Generate me a similar question◊⚹

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