Long-Run Equilibrium in Perfect Competition and in Monopolistic Competition Are

question 101

Multiple Choice

Long-run equilibrium in perfect competition and in monopolistic competition are similar because in both models, firms:

• A) produce at the minimum point of the average total cost curve.
• B) set price equal to marginal cost.
• C) make zero economic profits.
• D) have excess capacity.

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Definitions:

Increasing Returns

This refers to a scenario in economics where, as the quantity of input increases, the rate of output increases at a faster rate, leading to economies of scale.

Long-Run Total Cost

The aggregate cost of production when all factors of production are variable and the scale of operation can change.

Units of Variable K

In economics, this refers to units of a variable factor of production (K often denotes capital), where the quantity can be changed in the short run to increase or decrease production.

Units of Output

The quantity of goods or services produced by an entity in a given period of time.