How Is Long-Run Equilibrium Under Monopolistic Competition Similar to Long-Run

question 140

Multiple Choice

How is long-run equilibrium under monopolistic competition similar to long-run equilibrium under perfect competition?

• A)Firms produce at the minimum point of their average cost curves.
• B)Price equals marginal cost.
• C)Firms break even.
• D)Price equals marginal revenue.

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Definitions:

Adverse Selection

A situation where sellers have information that buyers do not, or vice versa, often resulting in a market failure.

Utility Function

Represents a mathematical model in economics which shows preferences over a set of goods and services, depicting satisfaction levels of consumers.

Probability

The measure of the likelihood that an event will occur, often expressed as a number between 0 and 1.

Utility Function

A mathematical representation of how consumer preferences over a set of goods and services translate into choices given their budget constraint.