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Figure: Profit Maximization in Monopolistic Competition
-(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.In panel (B)of the figure,the long-run equilibrium will result in:
A)no economic profits.
B)no accounting profits.
C)a tangency of the ATC curve with the MR curve.
D)no economic profits and a tangency of the ATC curve with the MR curve.

Question

Use the following to answer question:
Figure: Profit Maximization in Monopolistic Competition 
-(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.In panel (B)of the figure,the long-run equilibrium will result in:
A)no economic profits. 
B)no accounting profits. 
C)a tangency of the ATC curve with the MR curve. 
D)no economic profits and a tangency of the ATC curve with the MR curve.

Quizplus · Accepted Answer

In the long-run equilibrium of monopolistic competition, firms earn zero economic profits as the ATC curve is tangent to the demand curve, not the MR curve.

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