1. As new firms enter a monopolistically competitive market, the demand faced by

Question

1. As new firms enter a monopolistically competitive market, the demand faced by each competing firm becomes more inelastic. A) True B) False

2 The long-run equilibrium of a monopoly is characterized by its price being equal to its MR but always greater than its ATC. A) True B) False

3. A monopolistically competitive firm sets its price equal to its MR, while keeping it above MC. A) True B) False

4. We say that the long-run equilibrium of a monopolistically competitive firm reflects excess capacity because its MC is not equal to its ATC. A) True B) False

Explanation / Answer

False

True

False

False

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