Now that you have studied monopolistic competition, let\'s see how well you can
ID: 1129425 • Letter: N
Question
Now that you have studied monopolistic competition, let's see how well you can distinguish a firm in a monopolistically competitive market from a firm in a perfectly competitive market. Given the description of the firm below, decide whether it applies to monopolistic competition, perfect competition, or both. You may have to adjust the scroll bar to see the complete list. Items (9 items) (Drag and drop into the appropriate area below) a firm that produces at efficient scale in the long run a firm that produces an identical product to all of its rivals a firm that produces with excess capacity in the long run a firm that maximizes pr by producing where MR a firm that has market power a firm that sets price greater than marginal cost a firm that earns zero economic profit in the long run Categories Perfect competition Monopolistic comp. Both Drag and drop here Drag and drop here Drag and drop hereExplanation / Answer
(1) Firm that produces at efficient scale in long run - Both [Efficient scale means when Price = ATC]
(2) Firm that produces an identical product - Perfect competition
(3) Firm that produces with excess capacity in long run - Monopolistic competition
(4) Firm that ahs market power - Monopolistic competition
(5) Firm that sets price greater than marginal cost - Monopolistic competition [Firm maximizes profit by equating MR with MC, and Price > MR, so price > MC]
(6) Firm that earns zero economic profit in long run - Both
NOTE: Last statement is only partially seen and cannot be answered.
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