Tell whether the following is true or false and explain why.
a. In the long-run, purely competitive firms and monopolistically competitive firms earn zero economic profit (normal profit) and both will produce allocatively efficient outputs.
b. Monopolistically competitive firms and oligopoly firms typically earn zero economic profit in the long-run.
c. The kinked demand model of oligopoly allows for the possibility that cost functions, including marginal cost, can shift without changing the quantity and price of profit-maximizing output.
d. Non-price competition refers to reductions in production costs that are not reflected in price reductions.
e. If a natural monopolist engages in marginal cost pricing, it typically will earn abnormal profits.
Tell whether the following is true or false and explain why.
a. In the long-run, purely competitive firms and monopolistically competitive firms earn zero economic profit (normal profit) and both will produce allocatively efficient outputs.
b. Monopolistically competitive firms and oligopoly firms typically earn zero economic profit in the long-run.
c. The kinked demand model of oligopoly allows for the possibility that cost functions, including marginal cost, can shift without changing the quantity and price of profit-maximizing output.
d. Non-price competition refers to reductions in production costs that are not reflected in price reductions.
e. If a natural monopolist engages in marginal cost pricing, it typically will earn abnormal profits.
