Question Completion Status: QUESTION 32 1 points A monopolistically competitive

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Question Completion Status: QUESTION 32 1 points A monopolistically competitive firm will produce its product as long as the marginal revenue is less than price. less than marginal cost. o above price O above marginal costs. QUESTION 33 1 points Save Ans Assume that economic profits are earned by firms in monopolistic competition. What happens in the long run? New firms enter, the market demand rises, and the price for each firm falls until normal profits occur. @ New firms enter, the market supply rises, and the price for each firm falls until P. MC for each firm. New firms enter, and demand for each firm's product rises until economic profits are eliminated. New firms enter, and demand for each firm's product falls until economic profits are zero QUESTION 34 1 points Cartels are inherently unstable because any one firm can make additional profits by selling additional output at a price below marginal cost of the disincentive to cheat 0 firms behave like competitive firms facing a market price. any one firm can make additional profits by selling additional output at a price above marginal cost. QUESTION 35 1 points Com listic competition in the long run roduce more and sell at a lower price achieve allocative efficienc produce less and sell at a higher price produce less and sell at a lower price

Explanation / Answer

32. a) less than price.

33. New firms enter, and demand for each firm's product falls until economic profits are zero.

When firms in short run earns profit then new firms enter into the market and decreases each firm's sale and leads to zero economic profit.

34. any one firm can make additional profits by selling additional output at a price above marginal cost.

35. produce less and sell at a higher price.

Due to product differentiation, monopolistic firm charges higher price and sold less number of goods as compared to under Perfect competition.

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