Assume that a monopolistically competitive industry is in the long-run equilibrium. Show the effect of a fall in demand on a firm’s price and profit in (a) the short run and in (b) the long run.
Assume that a monopolistically competitive industry is in the long-run equilibrium. Show the effect of a fall in demand on a firm’s price and profit in (a) the short run and in (b) the long run.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In what ways is a monopolistically competitive firm likely to be less efficient than one under perfect competition ?
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