Suppose that a firm in a monopolistically competitive market charges $10 for its good, sells 100 units of output, and has a marginal revenue of $6 in the long run. Given this, we can conclude that the marginal cost of production for the firm is _____ and the average cost of production is:

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, a firm's marginal cost equals its marginal revenue in equilibrium. Therefore, the marginal cost is $6. Since the firm charges $10 for its good and is in long-run equilibrium, its average cost must also be $10, allowing it to break even.

Suppose That a Firm in a Monopolistically Competitive Market Charges