Asked by Karim velasquez on Jul 11, 2024
Verified
The price in long-run equilibrium for a monopolistically competitive firm is _____ and output is _____,compared with that of a perfectly competitive firm with an identical production function and cost curves.
A) higher;higher
B) higher;lower
C) lower;higher
D) lower;lower
Monopolistically Competitive Firm
A company operating in a market structure where many firms sell products that are similar but not identical, allowing for product differentiation and some degree of market power.
Perfectly Competitive Firm
A company that operates in a market where there are many buyers and sellers, none of which can influence the market price.
Long-Run Equilibrium
A state where all factors of production in an economy are fully adjusted to market conditions, leading to stable prices and full employment of resources.
- Analyze the distinctions in terms of pricing, output, and achieving long-run equilibrium between perfect competition and monopolistic competition.
- Comprehend the reasons behind and consequences of excess capacity in monopolistic competition.
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Learning Objectives
- Analyze the distinctions in terms of pricing, output, and achieving long-run equilibrium between perfect competition and monopolistic competition.
- Comprehend the reasons behind and consequences of excess capacity in monopolistic competition.
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