Monopolistically competitive and perfectly competitive firms are different because the former Answer

  1. Monopolistically competitive and perfectly competitive firms are different because the former:
    A. can have positive economic profits in the short run, whereas the latter cannot.
    B. can have negative economic profits in the short run, whereas the latter cannot.
    C. has economic profits of zero in the long run, whereas the latter has positive or negative economic profits.
    D. earns normal profits of zero in the long run, whereas the latter has positive or negative normal profits.
    E. faces a negatively sloped demand curve, whereas the latter does not.

    9. If, in the short run, a perfectly competitive firm is producing at a point where total cost is greater than total revenue, then the firm should:
    A. shut down because economic profits are negative.
    B. continue to produce as long as P > AVC.
    C. continue to produce because accounting profits are positive.
    D. set a higher price for its output.
    E. set a lower price for its output.

    10. A firm in perfect competition is assumed to be:
    A. a price leader.
    B. a developer of new inventions.
    C. small in size, relative to the size of the industry.
    D. large in size, relative to the size of the industry.