GENERAL KNOWLEDGE

Detailed explanation-1: -This results in the firm’s long-term equilibrium under Monopolistic Competition. The equilibrium is given by the point of tangency between the firm’s AR curve and LAC curve, which is at point E in Fig. ii. Therefore, in the long-run, under monopolistic competition, firms earn only normal profits.

Detailed explanation-2: -11.4.3 Group Equilibrium in Monopolistic Competition The price-output equilibrium of all firms is known as group equilibrium. Group equilibrium represents the price and output of firms having close substitutes.

Detailed explanation-3: -Group equilibrium means price output adjustment of a number of firms, instead of an individual firm, whose products are close substitutes. Group equilibrium represents the price and output of organizations having close substitute.

Detailed explanation-4: -Group equilibrium represents the price and output of the organizations having close substitutes. Hence, monopolistic competition is also referred to as group equilibrium.