Economics · Monopolistic Competition & Long-run Equilibrium
Given below are two statements, one labeled as Assertion (A) and the other as Reason (R): Assertion (A): In the long run under imperfect/monopolistic competition, firms earn only normal profits. Reason (R): Long-run average cost becomes equal to price due to free entry and exit of firms. Select the correct answer from the codes below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1(A) is false, but (R) is true.
- 2(A) is true, but (R) is false.✓
- 3Both (A) and (R) are true, but (R) is not the correct explanation of (A).
- 4Both (A) and (R) are true, and (R) is the correct explanation of (A).
Correct answer
(A) is true, but (R) is false.
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