Explain the Similarities and Differences Between the Long-Run Equilibrium for a Perfectly

question 114

Essay

Explain the similarities and differences between the long-run equilibrium for a perfectly competitive firm and a monopolistically competitive firm.Illustrate your answer with a graph demonstrating the long-run equilibrium for the two types of firms.

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Definitions:

Four-Firm Concentration Ratio

A measure indicating the total market share held by the four largest firms within an industry, used as an indicator of market competitiveness.

Industry Sales

The total revenue generated by all companies within a specific sector or industry.

Oligopoly

A market structure dominated by a small number of firms, leading to a high level of market control and potential for collaboration on prices and policies.

Herfindahl Index

A measure used to calculate the concentration of market power within an industry, determined by summing the squares of the market share percentages held by each firm within the market.