monopolistically competitive firm cannot make strictly negative profits in the long run because The firm’s optimal quantity is to produce where marginal revenue equals marginal cost The firm must operate at the efficient scale Either the firm exits or the exit of other firms shifts its demand curve to the right, raising profits until it makes zero profits. Exit of other firms shifts the market supply curve to the left and raises the price until firm

monopolistically competitive firm cannot make strictly negative profits in the long run because The firm’s optimal quantity is to produce where marginal revenue equals marginal cost The firm must operate at the efficient scale Either the firm exits or the exit of other firms shifts its demand curve to the right, raising profits until it makes zero profits. Exit of other firms shifts the market supply curve to the left and raises the price until firm

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 11PAE

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Question 37

A monopolistically competitive firm cannot make strictly negative profits in the long run because

		The firm’s optimal quantity is to produce where marginal revenue equals marginal cost
		The firm must operate at the efficient scale
		Either the firm exits or the exit of other firms shifts its demand curve to the right, raising profits until it makes zero profits.
		Exit of other firms shifts the market supply curve to the left and raises the price until firms make zero profits

Defintion Defintion Curve that represents the graphical relationship between the total supply of goods and services and the price level in the economy. When the price level increases, producers tend to supply more of a product in the market to earn a higher revenue or vice versa.

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