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Question

""Please answer with simple explainlations""""Please answer with simple explainlations""""Please answer with simple explainlations""""Please answer with simple explainlations""""Please answer with simple explainlations""

1.       Refer to the above diagrams, which pertain to monopolistically competitive firms. Long-run equilibrium is shown by:

a.       diagram a only.

b.      Diagram b only.

c.       Diagram c only

d.      Both diagrams b and c

2.       In long-run equilibrium monopolistic competition entails:

a.       An efficient allocation of resources.

b.      An over allocation of resources.

c.       An under allocation of resources.

d.      Production at the minimum attainable average total cost.

3.       The more elastic a monopolistic competitor

Explanation / Answer

1)a)diagram a only.

Reason:as in long run, ATC is minimised and also demand curve becomes tangent to it

2)a)An efficient allocation of resources.

Reason:In long run, effeciency is acheived

3)b)The higher its price relative to that of a pure competitor

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