In long-run equilibrium for both a competitive market and monopolistic competition accounting profit is zero. price...

In long-run equilibrium for both a competitive market and monopolistic competition

accounting profit is zero.

price equals marginal revenue.

long-run average cost is minimized.

economic profit is zero.*

productive efficiency is achieved.

Solutions

Expert Solution

In the long-run all factors of production become variable; therefore, the ATC curve will make a tangent on the demand curve. The equilibrium condition is still (MC = MR); but since the ATC curve is on the demand curve, the firm can’t not enjoy any economic profit but should be on break-even level. Therefore, the point E is equilibrium. At this point OQ quantity is produced at OP price, and there is no economic profit.

Conclusion: Therefore, in both the cases there would be no economic profit.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

1. In monopolistic competition, the long-run equilibrium results in zero economic profit of the firms in...

1. In monopolistic competition, the long-run equilibrium results in zero economic profit of the firms in these industries. The key factor in this is a. differentiated products. b. freedom of entry into and exit from the industry. c. price discrimination. d. brand names. 2. In the long run, a monopolistically competitive industry is characterized by all of the following, except a. an efficient use of resources. b. production that would exhibit lower costs per...

When a profit-maximizing firm in a monopolistic competitive market is in long-run equilibrium, marginal cost is...

When a profit-maximizing firm in a monopolistic competitive market is in long-run equilibrium, marginal cost is rising since an increase in production would increase average total cost. true or false The product-variety externality associated with monopolistic competition arises because in markets that are monopolistic competitive markets, firms try to differentiate their products. true or false If the monopolistic competitive firm is currently producing output at a level where the marginal cost curve intersects the demand curve, then it is producing...

1.In long-run competitive market equilibrium, price equals _ and economic profit is .

1.In long-run competitive market equilibrium, price equals _______ and economic profit is ______.A. Minimum average variable cost; greater than zeroB. Minimum average total cost; zeroC. Maximum marginal cost; zeroD.Minimum fixed cost; greater than zero2. Which of the following market structures has the highest barriers to entry? A. Perfect competition B. Monopoly C. Monopolistic competition D. Oligopoly3. Which of the following is consistent with a competitive market? A. A small number of firms B. Exit of small firms when profits are high for large firms C. Zero economic...

1. In both perfect competition and monopolistic competition, in the long run typical firms earn zero...

1. In both perfect competition and monopolistic competition, in the long run typical firms earn zero economic profit. Which of the market characteristics is most responsible for this zero economic profit? There are many buyers and sellers in these markets. There is no government control of price in these market. Identical (homogeneous) products are sold in these markets. Differentiated products are sold in these markets. There are no significant barriers to entry to these markets. 2. If a firm in...

Which of the following is not a characteristic of monopolistic competition? Zero long-run economic profit Relatively...

Which of the following is not a characteristic of monopolistic competition? Zero long-run economic profit Relatively large number of seller Nonprice competition Recognize mutual interdependence among firms Which of the following is not a characteristic of the long-run equilibrium for a monopolistically competitive competitive firm? Marginal revenue equals marginal cost Price equals the minimum (short-run and long-run) average total costs Long-run economic profit is equal to zero Price is greater than (short-run and long-run) marginal cost Market structure where firms...

The long-run profit-maximizing equilibrium of a firm in monopolistic competition in many ways is similar as...

The long-run profit-maximizing equilibrium of a firm in monopolistic competition in many ways is similar as well as different from both under monopoly and that for a firm in a perfectly competitive market. Using three separate diagrams, articulate the differences and similarities (demand conditions, cost conditions and level of profits).

In the long-run equilibrium, all firms in a perfectly competitive market earn zero economic profit. Explain...

In the long-run equilibrium, all firms in a perfectly competitive market earn zero economic profit. Explain why this is true using intuition and graphs.

A monopolistically competitive firm in long-run equilibrium: will make negative profit. will make zero profit. will...

A monopolistically competitive firm in long-run equilibrium: will make negative profit. will make zero profit. will make positive profit. Any of the above are possible. None of the above are possible. The Cournot model of symmetric duopoly suggests that the market equilibrium position is such that: one firm is larger than the other in the final equilibrium and the largest firm produces the largest quantity of output. economic profits are zero for both firms. total industry output is the same...

When a profit-maximizing firm in monopolistic competition is producing its long-run equilibrium quantity, A) it will...

When a profit-maximizing firm in monopolistic competition is producing its long-run equilibrium quantity, A) it will be earning economic profit. B) its price will equal its marginal cost. C) its price will be equal to its average total cost. D) its marginal revenue will exceed its marginal cost.

both perfect competitors and monopolistic competitors? 1. earn zero economic profit in the long run? 2....

both perfect competitors and monopolistic competitors? 1. earn zero economic profit in the long run? 2. use marginal cost pricing? 3. experience product differentiation? 4.find prices pushed to the min of long-run ATC by entry

Subjects