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Asked by Rogelio De Santiago on May 28, 2024

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Since a monopolistically competitive firm has the same long-run profits as a perfectly competitive firm,both types of industries are efficient.

Long-run Profits

Earnings achieved over an extended period, where all inputs can be adjusted by firms, reflecting the company's ability to adapt and reoptimize operations.

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information.

Efficient

The optimal allocation and utilization of resources to achieve the best possible outcome or output.

  • Comprehend the effects of transient and enduring equilibria on profitability in the context of monopolistic competition.
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MG
Monica GonzalezJun 02, 2024
Final Answer :
False
Explanation :
While both types of industries can be efficient in the long run, monopolistically competitive firms often have higher prices and lower output compared to perfectly competitive firms, which can lead to allocative and productive inefficiencies. Therefore, monopolistically competitive industries may not always be as efficient as perfectly competitive industries.

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