Which of the following is true of the output level produced by a firm in long-run equilibrium in a monopolistically competitive industry?
A) It produces at minimum average cost.
B) It does not produce at minimum average cost, and average cost is increasing.
C) It does not produce at minimum average cost, and average cost is decreasing.
D) Either B or C could be true.

Question

Quizplus · Accepted Answer

In long-run equilibrium, a monopolistically competitive firm produces at a level where average cost is not minimized, and average cost is decreasing due to excess capacity.

Which of the Following Is True of the Output Level