In a long-run equilibrium,
A)only a perfectly competitive firm operates at its efficient scale.
B)only a monopolistically competitive firm operates at its efficient scale.
C)neither a competitive firm nor a monopolistically competitive firm charges a markup over marginal cost.
D)both a perfectly competitive firm and a monopolistically competitive firm operate at their efficient scale of production.

Question

Quizplus · Accepted Answer

In a long-run equilibrium, only a perfectly competitive firm operates at its efficient scale, where price equals marginal cost, ensuring no economic profits and efficient scale of production. Monopolistically competitive firms, due to product differentiation and market power, typically do not operate at their efficient scale and often charge a markup over marginal cost.

In a Long-Run Equilibrium