Solved: In a monopolistically competitive market in long run, Macroeconomics

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In a monopolistically competitive market in long run

Assignment

In a monopolistically competitive market, in long run equilibrium, the government applies a specific $2 per unit tax per unit of output.
- What happens to the profit of a typical firm in this market, in both the short run and long run?
- Does the number of firms rise or fall?
- Why or why not?
Under monopolistic competition with identical firms, is it possible for a firm to produce at the minimum of its average total coast curve? Explain

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