In the long run,a firm in monopolistic competition ________ a markup of price over marginal cost,and a firm in perfect competition ________ a markup of price over marginal cost.
A) has; has
B) has; does not have
C) does not have; has
D) does not have; does not have
E) might have; might have

Question

Quizplus · Accepted Answer

In monopolistic competition, firms have some market power, meaning they can set a markup of price over marginal cost to increase their profits. In contrast, in perfect competition, firms have no market power and must sell at the market price, which equals marginal cost. Therefore, they do not have a markup of price over marginal cost.

In the Long Run,a Firm in Monopolistic Competition ________ a Markup