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Economics
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GRAPH the long-run profit of a monopolistically competitive firm. Do monopolistically competitive firms generate a long-run profit? Why is a monopolistic competition said to be inefficient?

Jan 9th, 2015

Yes. They generate long-run profit by maximizing profits by producing goods through equating marginal revenues with its marginal costs.

Monopolistic competition is said to be inefficient since it achieve neither productive nor allocative efficiency. Again, owing to the fact that monopolistic competitive business has more power over market, it maximization of its production level hence resulting in net consumer loss.


Jan 9th, 2015

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