1.Which of the following accurately describes what makes a monopolistically competitive market allocatively inefficient?

ANSWER CHOICES:

A)Private businesses have a price in excess of their marginal cost of production.

B)Production occurs where the average total cost is not at its minimum.

C)Short-run profits still diminish to normal profits in the long run, forcing some firms out of the market.

D)Long-run supernormal profits inadequately incentivize entrepreneurship and innovation.

E)Firms are unable to charge the equilibrium price, leading to deadweight loss.

2.At which of the following price and quantity levels would the unregulated market clear?

MSC MPC P Price ($) P. MSB = MPB Q Q QuantityMSC MPC Price ($) 5 4 MSB = MPB 100 120 Quantity