Which of the following is true in long-run equilibrium for a firm in a monopolistic competitive industry?
A) The demand curve is tangent to marginal cost curve.
B) The demand curve is tangent to average cost curve.
C) The marginal cost curve is tangent to average cost curve.
D) The demand curve is tangent to marginal revenue curve.

Question

Quizplus · Accepted Answer

In the long-run equilibrium, the firm in a monopolistic competitive industry produces at a point where the demand curve is tangent to the average cost curve. This ensures that the firm is operating at its optimum level of production efficiency, where it is producing at the lowest possible average cost while still satisfying consumer demands. Therefore, option B is the correct choice.

Which of the Following Is True in Long-Run Equilibrium for a Firm