Explain how the equilibrium position of a monopsonisticallycompetitive firm is achieved in the long run and how it may differ from theequilibrium position of the firm in the short run.

Solution
In a monopsonistically competitive industry, there is large number of small buyers. It is
the counterpart of monopolistically competitive industry. The difference between the two is that
the former is about the input market and latter is an output market industry. In monopsonistically
competitive industry there is large number of small buyers of labour input for example and they
buy similar kind of labour but not identical labour. Entry and exit is relative free in this market
and it is less efficient than perfectly competitive market of labour input. The supply curve of
labour faced by monopsonistically competitive industry is relatively elastic as compared to
monopsony where there...