-The above figure shows the demand and cost curves for a firm in monopolistic competition in the long run. The firm maximises its profit by

Question

Quizplus · Accepted Answer

In monopolistic competition, in the long run, firms earn zero economic profit due to the entry of new firms and the assumption of easy entry and exit. This situation is characterized by the firm's price equaling average cost (P = AC), not necessarily where marginal cost (MC) equals marginal revenue (MR), as would be the case for profit maximization in the short run. Without the specific demand and cost curves provided in the question, it's impossible to determine the exact quantity and price from the given options. Therefore, without additional information or a figure, none of the provided options can be definitively chosen as correct.

-The Above Figure Shows the Demand and Cost Curves for a Firm