.\'Il T-Mobile 6:39 PM Touch to return to call 36:43 Which statement is true of
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.'Il T-Mobile 6:39 PM Touch to return to call 36:43 Which statement is true of fims in both perfect competition and g-run profits are equal to The long- run price is equal to cost, and sotal cost Price is equal to that the level of output is The long. rn level of output is at the point total cost is Competition among sellers in monopolistic competition means that all of the firms in the industry will produce the same product. False True Which statement would make it difficult for Georgia peach suppliers to collude? Each supplier has the same There are only a few buyers of peaches Buyers of peaches have very little peaches ar There are oely a fewExplanation / Answer
1. Long-run economic profits are equal to zero.
Whether firms earn positive profit or suffers loss in the short run under both forms of market, in long run firms will adjust i.e. enter or exit the market which leads to economic profit of zero.
Perfect Competition is a form of market structure in which there is free entry and exit of firms and firms are selling homogeneous and identical products in the market. Firms under this form of market are price takers rather than price makers. Industry determines the equilibrium price from the demand and supply curve intersection. Sellers can sell any unit of commodity at that price and firms does not have any price control over the commodity. If one seller try to charge higher price then it will lose all his customers because all firms are selling similar products in every respect like color, shape, brand, etc.
Monopolistic competition refers to a market situation in which there are large number of buyers and sellers. The sellers sell closely related or differentiated products but not identical product. The products are close substitutes of each other. Product differentiation is the most important feature of monopolistic competition. Each firm under monopolistic competition enjoys the monopoly over the brand of the commodity and thus the firm has the control over the price of the commodity. Under monopolistic competition, MR < AR and AR and MR curve slope downwards and MR curve lies below AR curve. But these curves are more elastic. Example: Firms producing different brands of shampoos like Sunsilk, Pantene, Head & Shoulders, Dove etc. Monopolistic competition combines the features of monopoly and perfect competition.
2. False
Monopolistic firms sell differentiated products in the market.
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