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4 June, 13:29

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

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  1. 4 June, 13:38
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    B. neither a competitive firm nor a monopolistically competitive firm charges a markup over marginal cost.

    Explanation:

    Marginal cost is the price added by producing an additional unit of a good. At a long-run equilibrium condition, two or more monopolistically competitive firm's economic profits are zero, therefore any new firm venturing into the market has no incentive. Thus, neither a competitive firm nor a monopolistically competitive firm charges a markup over marginal cost.
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