Which of the following statements about monopolistically competitive firms and oligopolistic firms in the long run is true?
A) Both earn excess profits.
B) Both operate inefficiently.
C) Both charge a price equal to long-run average total cost.
D) All of the above are true.

Question

Quizplus · Accepted Answer

Monopolistically competitive firms and oligopolistic firms tend to operate inefficiently in the long run. Monopolistically competitive firms face excess capacity, while oligopolistic firms may not produce at minimum average total cost due to strategic interactions among few firms, leading to inefficiencies.

Which of the Following Statements About Monopolistically Competitive Firms and Oligopolistic