TNAME. FIRST NAME TLAST NOPOLISTIC COMPETTTION in monopolistically competitive m
ID: 1119346 • Letter: T
Question
TNAME. FIRST NAME TLAST NOPOLISTIC COMPETTTION in monopolistically competitive markets: -maximizing firms in charg rice that is equal to average total cost always chargea similar to each other. b sell products that l positive economic profit in the long run. tend to earn bause their products are differentiated there are no barriers to entry. tive firms in long-run equilibrium, economic profit is: their products are unique For mon positive because their zero because ro because of strong barriers to entry. competitive firm is producing where marginal revenue is equal to f a mon bost but price is greater than marginal cost,the f ain should decrease output to increase profit. J hould increase output to increase profit. b should continue to produce at this point because it is cost, the firm maximizing profit output, decreasing oueae un, it is true that monopolistically competitive firms produce where: could increase profit by either increasing ordy MC and P> minimum average cost p> MC and P = minimum average cost P MC and P ATC in the long run. b. earns positive economic profits in the long run c. produces where MR MC to maximize profit. d. All of the above are true Monopolistically competitive firms a. persistently earn positive economic profits in both the short run and the long run b. may earn either profits or losses in the short run, but tend to earm zero economic profits in the long run. tend to incur persistent losses in both the short run and the long run. earn zero economic profits in the short run but incur losses in the long run. c.Explanation / Answer
1> a
Reason
The maximum profit is earned when the price and marginal cost are equal.
2> c
In monopolistic competition barrier to entry is low, thus ultimately the profit falls to zero.
3>c
It is earning a positive amount of profit as the price is higher than the MC, so it should continue.
4> d
In monopolistic competition, due to the low barrier, the profit will be zero in the long run.
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