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Since a Monopolistically Competitive Firm Has the Same Long-Run Profits

question 74

True/False

Since a monopolistically competitive firm has the same long-run profits as a perfectly competitive firm,both types of industries are efficient.


Definitions:

Long Run

A period in which all factors of production and costs are variable, enabling full adjustment to change.

Short Run

A period in which at least one input in the production process is fixed, and only some inputs can be adjusted by firms.

Decreasing Costs

A situation where the total cost of production decreases as the volume of production increases.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, inversely related to normal goods.

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