In the short-run equilibrium in a monopolistically competitive industry, a firm's marginal cost is equal to its _________ but in the long run equilibrium, a firm's average cost is equal to its __________.
A)price; demand.
B)average cost; price.
C)marginal revenue; marginal cost.
D)marginal revenue; price.

Question

Quizplus · Accepted Answer

In the short-run equilibrium of a monopolistically competitive industry, a firm's marginal cost equals its marginal revenue, allowing for profit maximization. In the long-run equilibrium, due to entry and exit of firms, a firm's average cost equals its price, leading to zero economic profit.

In the Short-Run Equilibrium in a Monopolistically Competitive Industry, a Firm's