Question

Because this market is a monopolistically competitive market, the firm's average cost in long-run equilibrium is the long-run average cost it would achieve as a firm operating in a perfectly competitive market. The production level of a monopolistically competitive firm in long-run equilibrium is the production level of a perfectly competitive firm. This difference in output is predicted by the

Answer 1

The correct answer is "Higher than, Lower than and Excess production theory".

Step-by-step explanation:

Under Monopolistic Competition:

Average cost = 70

Production level = 50

Under perfect competition:

Average cost = 65

Production level = 70

• Excess capacities are a circumstance where an economic performance would be less than the commodity that somehow a company might offer to that same marketplace.
• Throughout terms of long-lasting balances, the commodity demand of such a monopolistic competition corporation is lesser than that of a complete business entity.