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chief333 chief333
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A year ago
Consider a monopolistically competitive industry in long-run equilibrium. Will this industry be productively efficient?

▸ Yes. Since the firms are in long-run equilibrium, they will all be operating on their LRAC curves.

▸ Yes. Since the firms are in long-run equilibrium, they will all be producing at the minimum of their LRAC curves.

▸ No. Firms are selling their output at a level where price exceeds marginal cost and thus, by definition, cannot be productively efficient.

▸ No. Since firms are selling differentiated products and there is no industry-wide price, we cannot conclude that marginal cost will be equated across all firms.

▸ Yes. In long-run equilibrium, each firm is producing at an output level where price is equal to marginal cost.
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Microeconomics

Microeconomics


Edition: 17th
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ricyoungricyoung
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chief333 Author
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A year ago
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Just got PERFECT on my quiz
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Correct Slight Smile TY
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