Can a firm in monopolistic competition provide an efficient degree of product variety?
An efficient degree of product variety

Question

Can a firm in monopolistic competition provide an efficient degree of product variety? 
 An efficient degree of product variety

Accepted Answer

occurs when the marginal social benefit of product variety equals its marginal social cost.

Answer

occurs because people value product variety more than product uniformity.

Answer

occurs when the marginal social benefit of product variety is maximized.

Answer

never occurs because the marginal social benefit of product variety is always greater than its marginal social cost.

Answer

never occurs because the firm always has excess capacity.

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