If a Perfectly Competitive Firm and a Monopolistic Competitor in Long

question 36

Multiple Choice

If a perfectly competitive firm and a monopolistic competitor in long run equilibrium face exactly the same demand and cost curves, then there is high probability that

• A)the former will earn zero economic profits, but the latter will earn positive economic profits.
• B)both will earn zero economic profits, but the former will attain lower unit costs than the latter.
• C)both will earn zero economic profits, but the latter will attain lower unit costs than the former.
• D)both firms will earn zero economic profits, and attain the lowest possible unit costs.
• E)neither firm will earn zero economic profits, but both will attain the lowest possible unit costs.

---

Definitions:

LPC

Least Preferred Coworker scale, a tool used in Fiedler's Contingency Theory to measure a leader's task or relationship orientation.

Leadership

The act or ability of leading a group towards achieving a common goal, often involving inspiring and guiding others.

Low LPC Leader

A leadership style characterized by a primary focus on completing tasks and obtaining results over building relationships, according to the Least Preferred Coworker (LPC) theory.

Participative Leadership

A leadership style wherein the leader includes team members in the decision-making process, ensuring their opinions and suggestions are considered.