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Asked Dec 1, 2019
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 Question.  What firms in perfect competitive market and monopolistic competitive market have in common? How they are different in the long run?  Explain using appropriate graphs. 

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Expert Answer

Step 1

The perfect competitive market and monopolistic competitive market, both are the market structure, with some similarities in common along with some dis-similarities.

In perfect competitive market, there are number of buyers and sellers, selling similar products. Each firm has all the information regarding market, product, and price. In monopolistic competitive market, there are number of sellers, selling similar but not identical products.

There are following similarities between these two-market structure:

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Step 2

There are following dis-similarities between these two-market structure:

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Step 3

In long-run perfect competition market, market is in equilibrium at point E, where Q* quantity of output produced, and pri...

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