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27 June, 05:13

If monopolistic competitors must expect a process of entry and exit like perfectly competitive firms, Group of answer choices

A. they will be unable to earn higher-than-normal profits in the short run.

B. they will wish to cooperate to make decisions about what price to charge.

C. they will wish to cooperate to make decisions about what quantity to produce.

D. they will be unable to earn higher-than-normal profits in the long run.

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Answers (2)
  1. 27 June, 07:07
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    D. They will be unable to earn higher than normal profits in the long run.

    Explanation:

    To begin, it is important to understand the concept of monopolistic market. Monopolistic market is premised on the idea that only one firm is providing a particular goods and services in the market. With this, the monopolistic firm simply call shots as prices, demand and supply, profits earned are determined by their actions and inactions.

    Thus, from the scenario, we are told there would be free entry and exit into the industry - a reminiscent of those found in the perfectly competitive market.

    The implication of the foregoing is that, by allowing the above just as it is obtainable in a perfectly competitive market, we've diluted the monopolistic nature of the firm. The firm therefore will not be the only one to dictate the price and earn an unwholesome profit.

    From the option enlisted, option D aptly captures the turn of the market and the attending experience of the firm.
  2. 27 June, 08:08
    0
    D. they will be unable to earn higher-than-normal profits in the long run.

    Explanation: A monopolistic competition is a form of imperfect Competition where many firms that are located within a give market are known to offer similar products to the markets that are not enough to qualify them as a perfect close Substitute (the Purchase of one of the close Substitute does not necessarily prevent the purchase of another). in this type of imperfect Competition the possibility of a barrier to entry or exit is generally low.
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