If a perfectly competitive firm and a monopolistic competitor in long run equilibrium face the same demand and cost curves, then the competitive firm will produce a
A)greater output and charge a lower price than the monopolistic competitor.
B)greater output, but charge the same price as the monopolistic competitor.
C)greater output and charge a higher price than the monopolistic competitor.
D)smaller output and charge a lower price than the monopolistic competitor.
E)smaller output and charge a higher price than the monopolistic competitor.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms produce where price equals marginal cost, leading to a higher output and lower price compared to a monopolistic competitor, which faces downward-sloping demand and produces where marginal revenue equals marginal cost, resulting in lower output and higher price.

If a Perfectly Competitive Firm and a Monopolistic Competitor in Long