In long-run equilibrium, a monopolistically competitive producer achieves

Question

Quizplus · Accepted Answer

In the long-run equilibrium, a monopolistically competitive producer achieves neither productive efficiency nor allocative efficiency. This is because a monopolistically competitive firm produces at a level where marginal cost equals marginal revenue, which is less than the minimum average total cost. Hence, the firm does not achieve productive efficiency. Additionally, the price charged by a monopolistically competitive firm is greater than its marginal cost, and as such, the firm fails to achieve allocative efficiency. Therefore, choice A is the correct option.

In Long-Run Equilibrium, a Monopolistically Competitive Producer Achieves