Which of the following is true of monopolistic competition in long-run equilibrium?
A) P ATC and P MR
B) P = ATC and MR = MC
C) P = MR and P = MC
D) P ATC and MR = MC
E) P = ATC and P = MC

Question

Which of the following is true of monopolistic competition in long-run equilibrium?
A) P > ATC and P > MR
B) P = ATC and MR = MC
C) P = MR and P = MC
D) P > ATC and MR = MC
E) P = ATC and P = MC

Quizplus · Accepted Answer

In monopolistic competition in long-run equilibrium, firms make zero economic profit, which occurs when price (P) equals average total cost (ATC). Additionally, the condition for profit maximization in any market structure, including monopolistic competition, is where marginal revenue (MR) equals marginal cost (MC).

Which of the Following Is True of Monopolistic Competition in Long-Run