Distinguish between a perfectly competitive firm and a ...

[ts19998]

Distinguish between a perfectly competitive firm and a monopolistically competitive firm on the basis of the long-run equilibrium price.
 
  What will be an ideal response?

Question 2

There is a technological advance in the production of a good and simultaneously also an increase in the expected future price. Which of the following will happen?
 
  A) The equilibrium price will rise because the supply curve shifts rightward.
  B) The equilibrium price falls because the supply curve shifts leftward.
  C) The technological improvement shifts the supply curve rightward while the increase in the expected future price shifts the supply curve leftward. The net effect is not known.
  D) The demand curve shifts rightward and the supply curve does not shift.

[Amiracle]

Answer to Question 1

A perfectly competitive firm charges a price equal to marginal cost in the long run, while a monopolistically competitive firm charges a price higher than marginal cost in the long run.

Answer to Question 2

C

[ts19998]

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