Firms in monopolistic competition in the short run always

Question

Quizplus · Accepted Answer

In monopolistic competition, firms have some market power and can set their prices above marginal cost in order to maximize profit. Therefore, option A is the correct answer. B, C, D, and E are not always true as firms may not always make an economic profit, may not always set price equal to marginal cost, may not always produce at minimum average total cost, and may not always break even in the short run.

Firms in Monopolistic Competition in the Short Run Always