« previous next »

Author Question: Is it true that in the long run, a monopolistically competitive firm has market power but earns no ... (Read 10 times)

stock

  • Hero Member
  • *****
  • Posts: 573
on: Jul 1, 2018
Is it true that in the long run, a monopolistically competitive firm has market power but earns no profit? Explain.
 
  What will be an ideal response?

Question 2

The marginal expenditure curve of a monopsonist
 
  A) lies above the market supply curve.
  B) lies between the market demand curve and the market supply curve.
  C) lies parallel to the market demand curve.
  D) lies below the market supply curve.
Microeconomics ¦ Perloff ¦ 8th Edition
Buy Test-Bank


gcook

  • Sr. Member
  • ****
  • Posts: 343
Reply #1 on: Jul 1, 2018
Answer to Question 1

As strange as it sounds, yes. The firm earns zero profit because p = AC. The firm has market power because p > MC. One way to explain this is that the firm has market power to set price, but has no power to prevent entry.

Answer to Question 2

A


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Acute bronchitis is an inflammation of the breathing tubes (bronchi), which causes increased mucus production and other changes. It is usually caused by bacteria or viruses, can be serious in people who have pulmonary or cardiac diseases, and can lead to pneumonia.

Did you know?

As many as 20% of Americans have been infected by the fungus known as Histoplasmosis. While most people are asymptomatic or only have slight symptoms, infection can progress to a rapid and potentially fatal superinfection.

Did you know?

In the United States, there is a birth every 8 seconds, according to the U.S. Census Bureau's Population Clock.

Did you know?

A seasonal flu vaccine is the best way to reduce the chances you will get seasonal influenza and spread it to others.

Did you know?

The first war in which wide-scale use of anesthetics occurred was the Civil War, and 80% of all wounds were in the extremities.

This slave burial service, painted by John Antrobus in 1860, reflects an inversion of power relation This slave burial service, painted by John Antrobus in 1860, reflects an inversion of power relation
A port fuel-injected engine that is equipped with long, tuned intake-manifold runners. A port fuel-injected engine that is equipped with long, tuned intake-manifold runners.
Apply long effleurage stroke to entire arm-hand to shoulder. Brush off from shoulder to hand to ... Apply long effleurage stroke to entire arm-hand to shoulder. Brush off from shoulder to hand to ...
The demand for cheap coal to generate electrical power is rising The demand for cheap coal to generate electrical power is rising
A diagram showing one of Mendel’s crosses. True-breeding strains of pea plants with smooth and ... A diagram showing one of Mendel’s crosses. True-breeding strains of pea plants with smooth and ...
Competitive firms and maximization Competitive firms and maximization
Video: Decubitus Ulcer

For a complete list of videos, visit our video library