In the long run in monopolistic competition, the demand curve facing the typical firm
A)is perfectly elastic
B)slopes upward
C)is tangent to the firm's average total cost curve
D)lies above the firm's average total cost curve
E)is the same as the portion of the firm's marginal cost curve above average variable cost

Question

Quizplus · Accepted Answer

In the long run, firms in monopolistic competition earn zero economic profit, meaning the demand curve is tangent to the average total cost curve at the profit-maximizing quantity.

In the Long Run in Monopolistic Competition, the Demand Curve