Asked by Yassine Wydadi on Jun 10, 2024
Verified
Compared to a purely competitive firm in long-run equilibrium, the monopolistic competitor has a
A) lower price and lower output.
B) higher price and lower output.
C) higher price and higher output.
D) price and output that may be higher or lower.
Purely Competitive Firm
A firm that operates in a purely competitive market, characterized by many competitors, homogeneous products, and free market entry and exit.
Monopolistic Competitor
A firm that operates in a market with many other firms offering similar but not identical products, leading to competitive pricing and product differentiation.
- Understand the comparison between monopolistic competition and pure competition concerning price, output, and efficiency.
Verified Answer
ST
Stephanie TabulaJun 11, 2024
Final Answer :
B
Explanation :
Monopolistic competitors typically have higher prices and lower outputs compared to firms in pure competition due to product differentiation and lack of perfect competition.
Learning Objectives
- Understand the comparison between monopolistic competition and pure competition concerning price, output, and efficiency.