12, & 13 Exam- Requires Respondus LockDown Browser me Left:0:49:18 Karis Morriso
ID: 1165779 • Letter: 1
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12, & 13 Exam- Requires Respondus LockDown Browser me Left:0:49:18 Karis Morrison: Attempt 1 OC) has high barriers to entry but is "competitive' because it has many firms D) has no product differentiation but is "competitive" because it has many firms. Save Question 6(1 point) In the long run, monopolistically competitive firms like Hardee's and Carl's Jr. operate at a price that: O A) equals marginal cost B) is greater than average total cost c) allows them to make a small economic profit O D) drives economic profit to zero. ed Save ??Explanation / Answer
In the long run the monopolistic competitive firms earns zero economic profits, this is because if the firms are making positive profits other firms will enter into the market and the market demand curve of the existing firms shifts to the left. And on the other hand if the firms are making losses the old firms would exit the market and the demand curve for the existing firms shifts to the right.
It is the free entry and exit that makes the zero economic profit in the market for the monopolistically competitive firms.
ANS: drives economic profits to zero.
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