16 Question 7points) Seepagem v 2nd attempt 9 See Hi The following is a list of

Question

16 Question 7points) Seepagem v 2nd attempt 9 See Hi The following is a list of characteristics that describe a firm operating under monopolistic competition. Indicate whether these characteristics occur in the short run, the long run, or both. 1.The firm produces a differentiated product. Lummi 2 The firm maximizes profits 3. The firm earns zero economic profit 4.All factors of production (inputs) are variable. :5. At least one factor of production (an input) is fixed. 6. The LRATC curve is tangent to the demand curve.[ 7 The price charged to consumers is higher than marginal cost short run long run both 1st attempt

Explanation / Answer

1.  both ( differentiated prodduct is main strategy of monopolistic competition in both short run and long run)

2. both

3. long run ( demand curve is tangent to LRATC in long run ,therefore the economic profit will be zero)

4. long run ( in long run all factors are variable)

5. short run (in short run at least one factor is fixed)

6. long run (in the long run the deamd curve becomes tangent to the LRATC curve due too entry of new firms and price competition)

7. both (because demand curve faced by a firm has negative slope in both long run and short run)

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