The following is a list of characteristics that describe a firm operating under monopolistic competition. Indicate whether these characteristics occur in the short run, the long run, or both.1. The firm produces a differentiated product. 2. The firm maximizes profits. 3. The firm earns zero economic profit. 4. All factors of production (inputs) are variable. 5. At least one factor of production (an input) is fixed. 6. The LRATC curve is tangent to the demand curve. 7. The price charged to consumers is higher than marginal cost.

1. Both Short Run and Long Run

2. Both Short Run and Long Run

3. Long Run

4. Long Run

5. Short Run

6. Long Run

7. Both Short Run and Long Run

Explanation:

In Economics, the Short run refers to a period where wages and prices of other inputs are considered inflexible or rather hard to change whereas in the LONG RUN, these same inputs can be adjusted because they have had time to adjust.

In the both the Short and the Long Run, a company is capable of producing a differentiated product as well as maximising profit through MR=MC.

A firm can only however earn zero Economic profit in the long run as other firms come into the market and competition reaches its peak level.

It is also only in the Long Run that all factors of production are variable because they have time to adjust and adapt.

It is only in the Short run that at least one input is fixed. In the long run, all factors are variable.

In both the long and short run, the price charged to consumers can be higher than the Marginal Cost.

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