O courses.massouristate.edu/reedolien course:/ec016: YE Oligopoly (and Monopolis

Question

O courses.massouristate.edu/reedolien course:/ec016: YE Oligopoly (and Monopolisitic Competition) 1. Although a monopolistically competitive firm in long-run equilibrium is producing output at an average higher than the minimum, economists are not greatly concerned about this mefficiency because A additional firms may enter the industry and force price down B consumers gain satisfaction from hasing a wide variety of products available C consumers would unquestionably benefit from having fewer products produced more cheaply D advertising may allow a fim to espand outpur E firms are making zeso economic profit 2 In the long ron, the profi msvuimining, monopoi istically compettive firm fauls to produce a level of output wher A MR MC D MSB MSC E econonsc profits are tenlized atous the best, dan potat

Explanation / Answer

1) The correct answer is option E because profit = (P-ATC)*Q. Since P= ATC implies Profit =0

2) the correct option is E. because firm even producing where MR = MC still gets zero economic profit as in the long run price equals ATC.

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