Question

Which of the following type of businesses earn zero profits in the long-run market equilibrium? Oligopolists...

Which of the following type of businesses earn zero profits in the long-run market equilibrium?

Oligopolists and monopolistically competitive firms.

Perfectly competitive firms and monopolists.

Perfectly competitive firms and monopolistically competitive firms.

Monopolists and oligopolists

Homework Answers

Answer #1

Answer - Perfectly competitive firms and monopolistically competitive firms.

The firms under a perfect competition market and monopolistic competition will earn zero economic profit in the long run. In the long run, the firms under both the markets earns only normal profits (AR=AC).

In the long run the firm under perfect competition market and monopolistic competition market gets normal profits and zero economic profit just to restrict the entry of new firms into the market. If new firms enters into the market, the price will further decrease. So, to stop the entry of new firms they settle at a price where the price equals average cost and it offers no incentive for a new firm to enter into the market.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which firms typically have zero economic profits in the long run? options: A) monopolist, perfectly competitive...
Which firms typically have zero economic profits in the long run? options: A) monopolist, perfectly competitive B) perfectly competitive, monopolistically competitive C) oligopolist, monopolistically competitive D) perfectly competitive, oligopolist
Which of the following explains why profits are zero in the long-run for perfectly competitive firms?...
Which of the following explains why profits are zero in the long-run for perfectly competitive firms?                         a) since firms allowed to enter and exit the market, firms earning negative profits will leave the market,                         while new firms enter the market to take up the positive profits                         b) since firms all produce the same good, they must have the same cost so they all earn zero profits                         c) firms cannot raise price so it is not possible...
In long run equilibrium, monopolistically competitive firms experience ______ economic profits. A positive B zero C...
In long run equilibrium, monopolistically competitive firms experience ______ economic profits. A positive B zero C negative D can not be determined
If all firms in a perfectly competitive industry earn zero economic profits, in the long run,...
If all firms in a perfectly competitive industry earn zero economic profits, in the long run, the: Select one: a. industry supply curve will shift to the right. b. number of firms in the industry will decrease. c. number of firms in the industry will increase. d. industry supply curve will not shift.
Long-run equilibrium in a monopolistically competitive market is similar to long-run equilibrium in a perfectly competitive...
Long-run equilibrium in a monopolistically competitive market is similar to long-run equilibrium in a perfectly competitive market in that in both markets, firms produce where price equals marginal cost. produce at the minimum point of their average total cost curves. break even. produce where price equals marginal revenue.
Why all the firms in perfect completive market earn only zero economic profits in the long-run...
Why all the firms in perfect completive market earn only zero economic profits in the long-run equilibrium?(400-500 words w diagram for better understanding)
In the long run equilibrium, the economic profits earned by a monopolistically competitive firm will be...
In the long run equilibrium, the economic profits earned by a monopolistically competitive firm will be zero. true or false.
The force that leads to zero economic profits for monopolistically competitive firms in the long run...
The force that leads to zero economic profits for monopolistically competitive firms in the long run is A.  excess capacity. B.  price wars among firms. C.  entry by new firms. D.  excessive advertising.
Consider a competitive market with identical firms that is in long-run equilibrium. Which of the following...
Consider a competitive market with identical firms that is in long-run equilibrium. Which of the following statements captures the sequence of events from the short run to the long run after demand increases? a.When demand increases, price rises in the short run, causing each firm to produce more and earn a profit. The profit induces entry of new firms into the market until price returns to its initial value and each firm earns zero profit. b.When demand increases, price falls...
25. __________ Which of the following is true of long‐run equilibrium price in a monopolistically competitive...
25. __________ Which of the following is true of long‐run equilibrium price in a monopolistically competitive market? A) It is equal to average total cost. B) It is less than average total cost. C) It is higher than average total cost. D) It is lower than marginal cost. 27. __________ Total social surplus is maximized in a(n) ________. A) monopolistically competitive market B) perfectly competitive market C) oligopoly D) monopoly 28. __________ A firm is said to have market power...