« previous next »

Author Question: Is it true that in the long run, a monopolistically competitive firm has market power but earns no ... (Read 41 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?

There are major differences in the metabolism of morphine and the illegal drug heroin. Morphine mostly produces its CNS effects through m-receptors, and at k- and d-receptors. Heroin has a slight affinity for opiate receptors. Most of its actions are due to metabolism to active metabolites (6-acetylmorphine, morphine, and morphine-6-glucuronide).

Did you know?

Many medications that are used to treat infertility are injected subcutaneously. This is easy to do using the anterior abdomen as the site of injection but avoiding the area directly around the belly button.

Did you know?

Hip fractures are the most serious consequences of osteoporosis. The incidence of hip fractures increases with each decade among patients in their 60s to patients in their 90s for both women and men of all populations. Men and women older than 80 years of age show the highest incidence of hip fractures.

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?

People with high total cholesterol have about two times the risk for heart disease as people with ideal levels.

Norway lobsters on sale at a Spanish market Norway lobsters on sale at a Spanish market
Long-Term Potentiation Long-Term Potentiation
Feng Mengbo, Long March: Restart. Feng Mengbo, Long March: Restart.
Long-term relationships, especially those who are married, having a child Long-term relationships, especially those who are married, having a child
If you are able to earn 6.2% compounded semi-annually in an account, how long will it take for ... If you are able to earn 6.2% compounded semi-annually in an account, how long will it take for ...
A wave whose wavelength is 0.500 m is traveling down a 500-m long wire whose total mass is 25 ... A wave whose wavelength is 0.500 m is traveling down a 500-m long wire whose total mass is 25 ...
Video: Humerus Adduction Animation

For a complete list of videos, visit our video library