is. Refer to the above diagram for a monopolistically competitive firm in short-

Question

is. Refer to the above diagram for a monopolistically competitive firm in short-sun er uilibeium This firm will realize an economic: A. loss of $320 B. profit of $480 C. profit of $280. D. profit of $600. 17. In long-run equilibrium a monopolistically competitive producer achieves. A. neither productive efficiency nor allocative efticiency. B. both productive efficiency and allocative efficiency C. productive efficiency, but not allocative efficiency D allocative efficiency, but not productive efficiency 18. Oligopolistic industries are characterized by: A. a few dominant firms and substantial entry barriers. B. a few dominant firms and no barriers to entry C. a large number of firms and low entry barriers. D. a few dominant firms and low entry barriers.

Explanation / Answer

Q17

Answer

Option A

The firm produces at ATC=P

but the ATC=MC=P is the productive efficiency and MC=P is allocative efficiency. This both not possible in monopolistic competition

Q18

Answer

Option A

There are few entry firms and substantial entry barriers

so that the new firms cannot enter even if the industry is in profit.

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