Consider a firm operating with the following: price = 10; MR = 10; MC = 10; ATC = 10. This firm is:
A) making an economic profit of 10.
B) an example of monopolistic competition.
C) perfectly competitive in long-run equilibrium.
D) a monopolist for a product with a relatively inelastic demand.

Question

Quizplus · Accepted Answer

The firm's price, MR, and MC are all equal to 10, which means the firm is maximizing its profit. Additionally, the firm's ATC is also equal to 10, which suggests the firm is operating at its minimum efficient scale. Therefore, the firm is producing at its optimal level in a perfectly competitive market, indicating it is perfectly competitive in long-run equilibrium.

Consider a Firm Operating with the Following: Price = 10;