A Monopolistic Competitor in Long-Run Equilibrium Is Like a Perfect

question 261

Multiple Choice

A monopolistic competitor in long-run equilibrium is like a perfect competitor in that

• A) price equals marginal cost.
• B) price is greater than marginal cost.
• C) zero economic profits are made.
• D) both produce at the minimum points of their average total cost curves.

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Definitions:

Reduction

The act of making something smaller or less in amount, degree, or size.

Nondiversifiable Risk

The portion of an investment's risk that cannot be eliminated through diversification, often associated with market-wide risks.

Systematic Risk

The danger that affects the whole market or a part of the market, which cannot be reduced by diversifying investments.

Unique Risk

A risk that affects a very small number of assets, also known as unsystematic risk, specific risk, or idiosyncratic risk, and can be largely eliminated by diversification.