Question

Consider the long run equilibrium prediction in monopolistically competitive industries. a. How is the predicted long...

Consider the long run equilibrium prediction in monopolistically competitive industries. a. How is the predicted long run similar to the predicted long run in competitive industries? Why, what assumptions do we make about these industries that produce this similarity? b. How is the predicted long run different from the predicted long run in competitive industries? Why, what assumptions do we make about these industries that produce this difference?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1. Both perfectly competitive market and monopolsitc market earn only normal profit or zero economic profit in long run. Firms earm zero economic profit because of free entry and exit.

2. Monopolistic firm marginal revenue is less than price whereas perfectly competitive firm marginal revenue=price because both market have large number of seller and perfectly competitive firms sells homogenous product but  monopolistic firm sells differentiated goods due to which there is an excess capacity for monopolistic firm.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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.
Consider the food truck market, which is monopolistically competitive. It was in its long-run equilibrium. Explain,...
Consider the food truck market, which is monopolistically competitive. It was in its long-run equilibrium. Explain, with an aid of a diagram, how the significant decrease in the number of tourists would affect the food truck operators in the short run and long run.
When a monopolistically competitive industry is in long-run equilibrium
When a monopolistically competitive industry is in long-run equilibrium
2. Why is it the case in a long-run monopolistically competitive equilibrium that the firm’s demand...
2. Why is it the case in a long-run monopolistically competitive equilibrium that the firm’s demand curve is tangent to its average cost curve? Why could it not be a long-run equilibrium if the demand curve “cut through” the average cost curve?
In monopolistically competitive industries, economic profits are competed away in the long run; hence, there is...
In monopolistically competitive industries, economic profits are competed away in the long run; hence, there is no valid reason to criticize the performance and efficiency of such industries. In monopolistically competitive industries economic profits might be increased, but there will be productive inefficiency. economic profits might be diminished and there will be productive inefficiency. economic profits might be increased and there will be productive efficiency. economic profits might be diminished, but there will be productive efficiency. b. “In the long...
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.
Compare graphically the welfare implications of the long run equilibrium of a monopolistically competitive industry, monopoly...
Compare graphically the welfare implications of the long run equilibrium of a monopolistically competitive industry, monopoly and a perfectly competitive industry.
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
When a monopolistically competitive firm is in a long-run equilibrium, the values of average revenue, average...
When a monopolistically competitive firm is in a long-run equilibrium, the values of average revenue, average total cost, and price are all the same. Select one: True False
In the long run equilibrium for a monopolistically competitive firm, Group of answer choices P =...
In the long run equilibrium for a monopolistically competitive firm, Group of answer choices P = MC P = ATC, and the firm will be at the minimum of the ATC curve P = ATC, but the firm will not be at the minimum of the ATC curve P < MC
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT