FIGURE 11-2
-Refer to Figure 11-2.Diagram D depicts the only possible long-run equilibrium for a typical firm in

Question

Quizplus · Accepted Answer

Diagram D depicts the long-run equilibrium for a typical firm in a monopolistically competitive industry. In this market structure, firms have some market power as they differentiate their products, but there are also many competitors. The equilibrium quantity is where marginal revenue equals marginal cost, and the equilibrium price is higher than the perfectly competitive price due to the product differentiation. The firm earns normal profits in the long run.

FIGURE 11-2 -Refer to Figure 11-2.Diagram D Depicts the Only Possible Long-Run