A monopolistically competitive firm minimize its losses by producing where MR = MC as long as ________.

Question

Quizplus · Accepted Answer

A monopolistically competitive firm will only continue to produce and minimize its losses if the price it receives (P) is greater than the average variable cost (AVC) of production. This is because if the price is less than the AVC, the firm will not be able to cover its variable costs and will need to shut down in the short run. Therefore, only choice A is the best choice for this question.

A Monopolistically Competitive Firm Minimize Its Losses by Producing Where