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Figure 17-8 A graph of Price versus Quantity shows a straight line, M R, decreasing linearly from point A, a second straight line, D, decreasing
Figure 17-8 A graph of Price versus Quantity shows a straight line, M R, decreasing linearly from point A, a second straight line, D, decreasing linearly from point A at a slower rate than M R, a third straight line, M C, increasing from point K, and a curved line, A T C, decreasing at the beginning and increasing at the end. At Q = L, M R = M C at point J, where price=I, and at this quantity, M C = A T C at point B, where price = C. At Q = M, M C = A T C at point F, where price = E. Where D = A T C is noted by point H, where price=G. Refer to Figure 17-8. Assume a monopolistically competitive firm is currently producing the profit-maximizing level of output. Which of the following represents the excess capacity of this firm? a. BJ b. There is no excess capacity. c. GH d. LM
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