Exhibit 11-2
-Refer to Exhibit 11-2 for a profit-maximizing firm in a monopolistically competitive market. In the long run, the firm
A)sells 120 units at a unit price of $20.
B)sells 70 units at a unit price of $30.
C)sells 70 units at a unit price of 20.
D)sells 90 units at a unit price of $13.
E)sells 90 units at a unit price of $30.

Question

Exhibit 11-2 
-Refer to Exhibit 11-2 for a profit-maximizing firm in a monopolistically competitive market. In the long run, the firm
A)sells 120 units at a unit price of $20. 
B)sells 70 units at a unit price of $30. 
C)sells 70 units at a unit price of 20. 
D)sells 90 units at a unit price of $13. 
E)sells 90 units at a unit price of $30.

Quizplus · Accepted Answer

In the long run, the firm will produce where price equals average total cost (P=ATC) and will earn zero economic profit. In this case, at a quantity of 70 units, the price equals the average total cost of $30. Therefore, the firm will sell 70 units at a unit price of $30, earning zero economic profit.

Exhibit 11-2 -Refer to Exhibit 11-2 for a Profit-Maximizing Firm in a Firm