Asked by Justin alvarado on Apr 26, 2024
Verified
Monopolistically competitive sellers produce efficiently because they obtain only normal profits in the long run.
Monopolistically Competitive
Refers to a market structure where many firms sell products that are similar but not identical, leading to competition based on product differentiation.
Normal Profits
The minimum profit necessary for a company to remain competitive in the market, equivalent to the opportunity cost of capital.
Efficiently
Performing or operating in the best possible manner with the least waste of time and effort.
- Evaluate the influence of market formations on the allocation and production efficiency.
Verified Answer
ZK
Zybrea KnightMay 03, 2024
Final Answer :
False
Explanation :
Monopolistically competitive sellers do not necessarily produce efficiently in the long run. While they may obtain normal profits, they may still be producing at a higher cost than a perfectly competitive market, leading to a less efficient allocation of resources.
Learning Objectives
- Evaluate the influence of market formations on the allocation and production efficiency.