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In general monopolistically competitive frims earn profits?
The general monopolistically competitive firm does earn profit. They earn point about as much as oligopolies.
Monopolistically competitive firms may not be able to produce goods at the lowest possible average cost. This statement is describing how monopolistically competitive firms might be?
without economies of scale
Should a monopolistically competitive firm take into account it's fixed costs when deciding how much to produce?
No. A monopolistically competitive firm should produce up to the point where marginal revenue equals marginal cost.
Are monopolistically competitive firms efficient in long-run equilibrium?
Monopolistically competitive firms are not considered to be perfectly efficient in the long run. This is because they have some degree of market power due to product differentiation, which can lead to higher prices and lower output compared to perfectly competitive markets.
Under what circumstances will a monopolistically competitive firm's demand curve be least elastic?
A monopolistically competitive firm's demand curve will be least elastic when its products are unique and have few close substitutes, leading to less responsiveness to price changes by consumers.
Is a Monopolistically competitive firm productively efficient?
No because it does not produce at minimum average total cost
Monopolistically competitive firms are typically characterized by?
many firms selling products that are similar, but not identical.
A firm in a monopolistically competitive market is similar to a monopolist in the sense that it?
faces a downward-sloping demand curve
Does monopolistically competitive firms have horizontal marginal cost curve?
No it does not. Only Perfectly Competitive firms have a horizontal Marginal Cost curve, which is also there demand curve.
What happens to a monopolistically competitive firm that begins to charge an excessive price for its product?
Consumers will substitute with a rival's product.
What happens to monopolistically competitive firm that begins to charge an excessive price for its product?
Consumers will substitute with a rival's product.
What happens to a monopolistically competitive firm that begins to charge an excessive price for its products?
Consumers will substitute with a rival's product.
