Asked by Griffinn Kluth on Jun 03, 2024
Verified
Long-run equilibrium in perfect competition and in monopolistic competition are similar because in both models,firms _____ in the long run.
A) produce at the minimum point of the average total cost curve
B) set price equal to marginal cost
C) make zero economic profits
D) have excess capacity
Long-Run Equilibrium
A state in which all factors of production and outputs in an economy are fully adjusted to any changes in demand and supply, resulting in economic stability.
Perfect Competition
A market structure characterized by many buyers and sellers, identical products, and no barriers to entry or exit.
Zero Economic Profits
A situation in perfect competition where firms earn just enough revenue to cover all their costs, including opportunity costs, indicating no supernormal profit above the normal rate of return.
- Examine the variances in pricing, output capacity, and sustainability of long-run equilibrium between monopolistic and perfect competition models.
- Compare the long-run equilibrium characteristics of firms in perfect and monopolistic competition.
Verified Answer
Learning Objectives
- Examine the variances in pricing, output capacity, and sustainability of long-run equilibrium between monopolistic and perfect competition models.
- Compare the long-run equilibrium characteristics of firms in perfect and monopolistic competition.
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