In a long-run equilibrium,
A)excess capacity applies to monopolistically competitive firms but not to competitive firms.
B)zero economic profit applies to competitive firms but not to monopolistically competitive firms.
C)markup over marginal cost applies to both monopolistically competitive and competitive firms.
D)product variety externalities apply to both perfectly competitive firms and monopolistically competitive firms.

Question

Quizplus · Accepted Answer

In long-run equilibrium, monopolistically competitive firms experience excess capacity due to downward-sloping demand curves, unlike perfectly competitive firms which produce at minimum average total cost.

In a Long-Run Equilibrium