A monopolistically competitive firm will earn maximum profit if it produces at the lowest possible average total cost.True

Question

Quizplus · Accepted Answer

A firm in monopolistic competition faces downward sloping demand curve and produces at a level where marginal revenue is equal to marginal cost. This quantity of output is less than the level that minimizes average total cost. Therefore, the firm does not produce at the lowest possible average total cost.

A Monopolistically Competitive Firm Will Earn Maximum Profit If It