monopolistically competitive firm cannot make strictly negative profits in the long run because The firm’s optimal quantity is to produce where marginal revenue equals marginal cost The firm must operate at the efficient scale Either the firm exits or the exit of other firms shifts its demand curve to the right, raising profits until it makes zero profits. Exit of other firms shifts the market supply curve to the left and raises the price until firm
monopolistically competitive firm cannot make strictly negative profits in the long run because The firm’s optimal quantity is to produce where marginal revenue equals marginal cost The firm must operate at the efficient scale Either the firm exits or the exit of other firms shifts its demand curve to the right, raising profits until it makes zero profits. Exit of other firms shifts the market supply curve to the left and raises the price until firm
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 11PAE
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Question 37
A
The firm’s optimal quantity is to produce where marginal revenue equals marginal cost |
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The firm must operate at the efficient scale |
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Either the firm exits or the exit of other firms shifts its demand curve to the right, raising profits until it makes zero profits. |
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Exit of other firms shifts the market supply curve to the left and raises the price until firms make zero profits |
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