Suppose that a firm in a monopolistically competitive market is operating at its profit-maximizing point in the long run. The firm has an average total cost of $8 and produces 100 units of output. Given this, we can conclude that the total revenue of the firm is _____ and the price that it charges is:

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, in the long run, firms operate where price equals average total cost (P = ATC) to make zero economic profit. Given an average total cost of $8 and an output of 100 units, total revenue (TR) equals price (P) times quantity (Q), which is $8 * 100 = $800. Therefore, the price charged is also $8.

Suppose That a Firm in a Monopolistically Competitive Market Is