question
Each firm in a monopolistically competitive industry faces a downward-sloping demand curve because
answer
the firms product is different from those offered by other firms
question
In the short run, a firm operating in a monopolistically competitive market
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can earn zero economic profits
question
Which of the following is not a key feature of monopolistic competition?
answer
positive economic profits for firms in the long run
question
If firms in a monopolistically competitive market are earning positive profits, then
answer
new firms will enter the market
question
If firms in monopolistic competition are earning economic profits, which of the following scenarios would best describe the change existing frims would face as the market adjusts to the long-run equilibrium?
answer
a decrease in demand for each firm
question
The free entry and exit of firms in a monopolistically competitive market guarantees that
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both economic profits and economic losses disappear in the long run
question
New firms will likely enter a monopolistically competitive market when price exceeds
answer
average total cost
question
Consider monopoly, monopolistic competition, and perfect competition. In which of these three market structures does a profit-maximizing firm experience zero economic profit?
answer
the answer cannot be determined without knowing whether the market is in the long run or short run or short run
question
Since a firm in a monopolistically competitive market faces a
answer
downward-sloping demand curve, it will always operate with excess capacity
question
Which of the following best describes the idea of excess capacity
answer
the output produced by a typical firm is less than what would occur at the minimum pointbon its ATC curve
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