The diagram below shows demand and cost curves for a monopolistically competitive firm.
FIGURE 11-3
-Refer to Figure 11-3.In the long run,a monopolistically competitive firm will

Question

The diagram below shows demand and cost curves for a monopolistically competitive firm.
  FIGURE 11-3
-Refer to Figure 11-3.In the long run,a monopolistically competitive firm will

Quizplus · Accepted Answer

In the long run, a monopolistically competitive firm will produce where MR=MC and charge a price equal to its average total cost at that output level. This occurs at point A in the diagram, where the demand curve intersects the average total cost curve. Therefore, the firm will produce Q1 at Price P1.

The Diagram Below Shows Demand and Cost Curves for a Monopolistically