Answer: Please refer to Explanation
Explanation:
In a Perfectly Competitive market, multiple firms are selling the same product and at the same price whereas in a Monopolistic market, firms sell at goods that are differentiated and a s such are sold at different prices.
a. sells a product differentiated from that of its competitors. MONOPOLISTIC COMPETITIVE FIRM.
- This is the definition of the type of products sold in this market so this is a Monopolistic Competitive Firm.
b. has marginal revenue less than price. MONOPOLISTIC COMPETITIVE FIRM.
- As a result of goods being differentiated, firms in a Monopolistic market have to reduce prices to sell more. This leads to a Marginal Revenue curve that is less than the price.
c. earns economic profit in the long run. NEITHER.
- Due to low barriers to entry in both markets, companies cannot make an Economic profit in the long run as competition will increase with companies moving freely in and out of the market.
d. produces at the minimum of average total cost in the long run. PERFECTLY COMPETITIVE FIRM.
- In the long run, Perfectly Competitive firms produce at such a rate that their Average Total cost is at the lowest level as opposed to Monopolistic firms.
e. equates marginal revenue and marginal cost. BOTH.
- For both types of firms to be maximising output, they need to produce at the point where Marginal Revenue is equal to Marginal Cost because this level signifies a point where resources are neither being underutilized or overutilized.
f. charges a price above marginal cost. MONOPOLISTIC COMPETITIVE FIRM.
- As earlier mentioned, the Monopolistic firm produces at a point where Marginal Revenue is equal to marginal cost but at the same time marginal revenue is also beneath price. This means that if marginal cost is equal to marginal revenue then it must be less than Price as well.