Figure 16-8
-Refer to Figure 16-8. If this firm were operating in a perfectly competitive market in the long run, it would charge a price equal to point

Question

Figure 16-8  ​
-Refer to Figure 16-8. If this firm were operating in a perfectly competitive market in the long run, it would charge a price equal to point

Quizplus · Accepted Answer

In a perfectly competitive market, firms charge a price equal to their marginal cost in the long run, which corresponds to the lowest point on the average total cost curve (point E). In a monopolistically competitive market, firms have some degree of market power, allowing them to charge a price above marginal cost, typically where the marginal cost curve intersects the marginal revenue curve, which is represented by point C.

Figure 16-8 ​

Figure 16-8