A monopolistic competitor is in long-run equilibrium when

Question

Quizplus · Accepted Answer

In the long-run equilibrium of a monopolistic competitor, economic profits must be zero as new firms can enter the market in the long run. Additionally, the average total cost curve should be tangent to the demand curve at the point of output produced. This is because at this point, the firm is producing at the minimum point on the average total cost curve, which is also the point where price equals marginal cost. Therefore, choice A is the correct answer.

A Monopolistic Competitor Is in Long-Run Equilibrium When