For each of the following characteristics, say whether it describes a perfectly competitive firm, a monopolistically competitive firm, both, or neither.

a. sells a product differentiated from that of its competitors
b. has marginal revenue less than price
c. earns economic profit in the long run
d. produces at the minimum of average total cost in the long run
e. equates marginal revenue and marginal cost
f. charges a price above marginal cost

Multiple businesses offer the same product at a lower price in a Perfectly Competitive market, but in a Monopoly competition, firms sell commodities that are distinct and hence sold at various prices.

Sells the product that is distinct from its rivals'.

This is a Monopolistic Competitive Firm since this is the description of the sort of items supplied in this market.

Has a lower marginal revenue than the cost. Because items are different, companies in a Monopolistic market must lower prices in order to sell more. As a result, the Marginal Revenue curves is lower than the price.

In the big scheme of things, it generates a profit. Firms will not be able to earn an economic earnings in the future due to low barriers to entry in both sectors, since competition will intensify as companies move freely into or out of the marketplace.

In the long term, produces at the lowest possible average total cost. In the long term, Perfectly Competitive enterprises, as contrasted to Monopolistic firms, produce even at a rate that whose Average Overall Cost is the lowest.

the difference between marginal revenue and marginal cost. All types of organizations must produce at the position where Marginal Revenue equals Marginal Cost in order to maximize production since this level denotes a point when resources are neither underused nor overutilized.

charges a price that is higher than the cost of production. As previously stated, a monopolistic corporation produces at a position where marginal revenue equals marginal cost, but marginal revenue is indeed below price. This implies that if marginal cost equals marginal revenue, it also has to be smaller than Price.

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Please refer to Explanation

Explanation:

In a Perfectly Competitive market, multiple firms are selling the same product and at the same price whereas in a Monopolistic market, firms sell at goods that are differentiated and a s such are sold at different prices.

a. sells a product differentiated from that of its competitors. MONOPOLISTIC COMPETITIVE FIRM.

- This is the definition of the type of products sold in this market so this is a Monopolistic Competitive Firm.

b. has marginal revenue less than price. MONOPOLISTIC COMPETITIVE FIRM.

- As a result of goods being differentiated, firms in a Monopolistic market have to reduce prices to sell more. This leads to a Marginal Revenue curve that is less than the price.

c. earns economic profit in the long run. NEITHER.

- Due to low barriers to entry in both markets, companies cannot make an Economic profit in the long run as competition will increase with companies moving freely in and out of the market.

d. produces at the minimum of average total cost in the long run. PERFECTLY COMPETITIVE FIRM.

- In the long run, Perfectly Competitive firms produce at such a rate that their Average Total cost is at the lowest level as opposed to Monopolistic firms.

e. equates marginal revenue and marginal cost. BOTH.

- For both types of firms to be maximising output, they need to produce at the point where Marginal Revenue is equal to Marginal Cost because this level signifies a point where resources are neither being underutilized or overutilized.

f. charges a price above marginal cost. MONOPOLISTIC COMPETITIVE FIRM.

- As earlier mentioned, the Monopolistic firm produces at a point where Marginal Revenue is equal to marginal cost but at the same time marginal revenue is also beneath price. This means that if marginal cost is equal to marginal revenue then it must be less than Price as well.

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