Economic Chapter 13 Questions

in the long run, if a monopolistically competitive firm is earning normal profits (breaking even), then it should

not exit the industry because both explicit and implicit costs are covered

productive efficiency in monopolistically competitive markets does not occur in the long run because firms set the price

on the demandcurve where MR=MC to maximize economic profit, making output less than optimal from society's perspective

monopolistically competitive firms are not productively efficient because

output is less than society's optimal level because a producer's average total cost per unit is not at its lowest possible cost

achieving economic efficiency that reduces the number of resources used but increases the number of socially optimal outputs requires a triple equality. What are the three components that must be equal?

price, marginal cost, minimum average total cost

if a monopolistic firm is producing where its marginal revenue is less than its marginal cost, then the firm

should produce less outputs to increase profit or reduce losses

economic efficiency occurs when firms produce

where P=MC=minimum ATC

in long run monopolistic competitive firms,

will just break even and make no economic profit