In the long run, the representative firm in monopolistic competition tends to have rev: 05_15_2018 Multiple Choice economic profits excess capacity. no product differentiation. a perfectly elastic demand curve.

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Lutz

Business

14 July, 00:49

In the long run, the representative firm in monopolistic competition tends to have rev: 05_15_2018 Multiple Choice economic profits excess capacity. no product differentiation. a perfectly elastic demand curve.

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Answers (1)

Know the Answer?

Collin Holder · Answer 1

The correct answer is excess capacity.

Explanation:

Monopolistic competition is characterized by a large number of firms. These firms produce differentiated goods which are not perfect substitutes but are close substitutes. The entry into the market is relatively easier than monopoly. These firms are price makers and face a downward-sloping demand curve. They face an excess capacity in the long run as they produce at an output level lower than the low-cost output.