Figure: Profits in Monopolistic Competition (Figure: Profits in Monopolistic Competition) Look at the figure Profits in Monopolistic Competition.A long-run equilibrium is illustrated at the profit-maximizing price ________ in panel _.
A)A; A
B)E; B
C)B; A
D)N; C

Question

Figure: Profits in Monopolistic Competition   (Figure: Profits in Monopolistic Competition) Look at the figure Profits in Monopolistic Competition.A long-run equilibrium is illustrated at the profit-maximizing price ________ in panel _.
A)A; A 
B)E; B 
C)B; A 
D)N; C

Quizplus · Accepted Answer

In the figure, the long-run equilibrium point is where the demand curve is tangent to the long-run average cost curve. This occurs at point E in panel B, where the profit-maximizing price is set. Panel A shows the profit that the firm earns at this price.