Suppose that a firm in a monopolistically market charges $8 for its good and sells 100 units of output in the long-run. Given this, we can conclude that the total cost of production for the firm is _____ and the average cost of production is:

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, firms can earn zero economic profit in the long run, meaning price equals average cost. Here, the firm charges $8 per unit, so the average cost is also $8. Selling 100 units at $8 each gives a total revenue (and thus total cost at zero economic profit) of $800.

Suppose That a Firm in a Monopolistically Market Charges $8