Answer to Question #320524 in Macroeconomics for anna

Question

3. For each of the following characteristics, say

whether it describes a perfectly competitive firm, a

monopolistically competitive firm, both, or neither.

a. sells a product differentiated from that of its

competitors

b. has marginal revenue less than price

c. earns economic profit in the long run

d. produces at the minimum of average total cost in

the long run

e. equates marginal revenue and marginal cost

f. charges a price above marginal cost

Answer 1

a. sells a product differentiated from that of its competitors - both

b. has marginal revenue less than price - both

c. earns economic profit in the long run - monopolistically competitive firm

d. produces at the minimum of average total cost in the long run - monopoly

e. equates marginal revenue and marginal cost - both

f. charges a price above marginal cost - neither