In long run equilibrium, a monopolistic competitive firm's price will
A)exceed ATC, but equal MC.
B)exceed both MC and ATC.
C)be less than both MC and ATC.
D)exceed MC, but equal ATC.

Question

Quizplus · Accepted Answer

In long run equilibrium, a monopolistically competitive firm will have its price equal to its average total cost (ATC) to ensure normal profit, but the price will exceed marginal cost (MC) due to the downward-sloping demand curve it faces.

In Long Run Equilibrium, a Monopolistic Competitive Firm's Price Will