In the Long Run, a Monopolistically Competitive Firm Charges a Higher

question 235

Multiple Choice

In the long run, a monopolistically competitive firm charges a higher price than a perfectly competitive firm. The reason for this difference is that monopolistically competitive firms

• A) act like monopolies and restrict output.
• B) have higher costs associated with advertising and product development.
• C) need to earn economic profits in the long run to justify their expenditures on product development.
• D) are able to price discriminate.