- Refer to Figure 26.2 for a monopolistically competitive firm.At the profit-maximizing output and price,this firm is experiencing economic
A)Profits and should stay in this market in the long run.
B)Profits but could make even higher economic profits producing the next best alternative good.
C)Losses but should keep producing in the short run.

Question

- Refer to Figure 26.2 for a monopolistically competitive firm.At the profit-maximizing output and price,this firm is experiencing economic
A)Profits and should stay in this market in the long run. 
B)Profits but could make even higher economic profits producing the next best alternative good. 
C)Losses but should keep producing in the short run.

Quizplus · Accepted Answer

In the short run, a monopolistically competitive firm may experience losses but should continue producing if it can cover its variable costs, as it can potentially reach a break-even point or profit in the long run.