GK
BUSINESS ECONOMICS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
The short run supply curve cannot be defined
|
|
|
AR curve cannot be defined
|
|
|
MR curve cannot be defined
|
|
|
None of the above
|
Detailed explanation-1: -In contrast, the short-run supply curve of a perfectly competitive is that portion of its marginal cost curve that lies above the minimum of the average variable cost curve. Because monopolistic competition does not set price equal to marginal revenue, it does NOT equate marginal cost and price.
Detailed explanation-2: -Companies in a monopolistic competition make economic profits in the short run, but in the long run, they make zero economic profit. The latter is also a result of the freedom of entry and exit in the industry.
Detailed explanation-3: -Monopolistic Competition in the Short Run-Key takeaways In the short run, firms should produce a quantity where marginal revenue equals marginal cost to maximize the profit or minimize the losses. If the market price is above the average total cost at the equilibrium output level, then the firm will make a profit.