For each of the following characteristics, indicate whether it describes a perfectly competitive firm, a

Question

For each of the following characteristics, indicate whether it describes a perfectly competitive firm, a monopolistically competitive firm, both, or neither. (Note: If the characteristic describes neither, leave the entire row unchecked.) Characteristic Perfectly Competitive Monopolistically Competitive Sells a product differentiated from that of its competitors Has marginal revenue less than price Earns economic profit in the long run Produces at the minimum of average total cost in the long run Equates marginal revenue and marginal cost Charges a price above marginal cost

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Characteristic Perfectly Competitive Monopolistically Competitive Sells a product differentiated from that of its competitors Monopolistically Competitive. Products are differentiated through various methods like material used, design, and trademarks. Has marginal revenue less than price Monopolistically Competitive. Firms in this market must reduce price to sell one additional unit of product. Earns economic profit in the long run Produces at the minimum of average total cost in the long run perfect competition. Indicates that this market is productive efficient Equates marginal revenue and marginal cost Perfectly Competitive. It is an indication of allocative efficiency Charges a price above marginal cost Monopolistically Competitive. It is an indication of allocative inefficiency.

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For each of the following characteristics, indicate whether it describes a perfectly competitive firm, a monopolistically competitive firm, both, or neither

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Archived Solution

Characteristic	Perfectly Competitive	Monopolistically Competitive
Sells a product differentiated from that of its competitors
Has marginal revenue less than price
Earns economic profit in the long run
Produces at the minimum of average total cost in the long run
Equates marginal revenue and marginal cost
Charges a price above marginal cost

Characteristic	Perfectly Competitive	Monopolistically Competitive
Sells a product differentiated from that of its competitors		Monopolistically Competitive. Products are differentiated through various methods like material used, design, and trademarks.
Has marginal revenue less than price		Monopolistically Competitive. Firms in this market must reduce price to sell one additional unit of product.
Earns economic profit in the long run
Produces at the minimum of average total cost in the long run	perfect competition. Indicates that this market is productive efficient
Equates marginal revenue and marginal cost	Perfectly Competitive. It is an indication of allocative efficiency
Charges a price above marginal cost		Monopolistically Competitive. It is an indication of allocative inefficiency.