In a situation of long-run equilibrium,which statement explains the differences between a perfectly competitive firm and a monopolistically competitive firm

Question

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In long-run equilibrium, both perfectly competitive and monopolistically competitive firms operate at zero economic profit. However, a monopolistically competitive firm does not operate at its efficient scale (where average total cost is minimized), meaning there is excess capacity. In contrast, a perfectly competitive firm operates at its efficient scale. Therefore, option B is the correct answer. Option A and D are incorrect because a perfectly competitive firm does not have excess capacity or operate at an inefficient scale in the long run. Option C is incorrect because in perfect competition, firms charge the market price, not a markup over marginal cost.

In a Situation of Long-Run Equilibrium,which Statement Explains the Differences