Question

In the long-run, a firm in monopolistic competition is like: a monopolist in that it earns a positive profit. no other firm in any market structure in that it breaks even while earning positive economic profit. a firm in perfection competition in that it earns normal profit. an oligopolist in that its behavior is based on what it expects others in the industry will do.

Answer 1

1. False

2. True

4. False

Step-by-step explanation:

In the long run, a firm in a monopolistic competition may not make positive profit why because they have a highly elastic demand, meaning the market is sensitive to price changes. Profit may turn negative in the long run, as they spend heavily on marketing because there are many firms offering products that are similar although not identical.

True, there are few barriers to entry in monopolistic competition.This makes monopolistic competition similar to perfect competition since all firms are able to enter into the market if they feel the profits are okay.

Oligopoly is different from monopolistic competition since firms set prices collectively in a cartel or under the leadership of one firm, rather than taking prices from the market. However, In monopolistic competition, there are many producers and consumers in the marketplace who can take unexpected decisions (independent decisions), but oligopoly blocks new entrants, and increase prices.