For each of the following characteristics, say whether it describes a monopoly firm, a monopolistically competitive firm, both, or neither.

5. Problems and Applications Q4

For each of the following characteristics, say whether it describes a monopoly firm, a monopolistically competitive firm, both, or neither. (Note: If the characteristic describes neither, leave the entire row unchecked.)

Characteristic	Monopoly	Monopolistically Competitive
Faces the entry of new firms selling similar products
Produces at the minimum of average total cost in the long run
Equates marginal revenue and marginal cost
Has marginal revenue less than price
Faces a horizontal demand curve
Earns economic profit in the long run

Solutions

Expert Solution

Characteristic	Monopoly	Monopolistically Competitive
Faces the entry of new firms selling similar products	No	Yes
Produces at the minimum of average total cost in the long run	No	No
Equates marginal revenue and marginal cost	Yes	Yes
Has marginal revenue less than price	Yes	Yes
Faces a horizontal demand curve	No	No

Rahul Sunny answered 1 year ago

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