In a long-run equilibrium, firms in both perfectly competitive markets and monopolistically competitive markets produce a quantity below the efficient scale of production.

Question

Quizplus · Accepted Answer

In a long-run equilibrium, firms in perfectly competitive markets produce at the efficient scale (where average total cost is minimized), while firms in monopolistically competitive markets produce below the efficient scale due to product differentiation and market power.

In a Long-Run Equilibrium, Firms in Both Perfectly Competitive Markets