question archive Suppose a firm in monopolistic competition is in long-run equilibrium

Suppose a firm in monopolistic competition is in long-run equilibrium

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Suppose a firm in monopolistic competition is in long-run equilibrium. Using diagrams, explain what is the effect on the firm's output, price and profit in the short run and in the long run of:

A) a rise in the firm's fixed costs of production, eg an increase in rent

B)a decrease in the firm's variable costs of production, eg a reduction in wages.

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