In the long run, which statement is TRUE for a monopolistically competitive firm?
A) Price equals average total cost, and MR MC.
B) Price is greater than average total cost, and MR = MC.
C) Price equals average total cost, and MR = MC.
D) Price is less than average total cost, and MR = MC.

Question

In the long run, which statement is TRUE for a monopolistically competitive firm?
A) Price equals average total cost, and MR > MC.
B) Price is greater than average total cost, and MR = MC.
C) Price equals average total cost, and MR = MC.
D) Price is less than average total cost, and MR = MC.

Quizplus · Accepted Answer

In the long run, a monopolistically competitive firm will produce at a point where price equals average total cost (P = ATC) to break even, and marginal revenue equals marginal cost (MR = MC) for profit maximization.

In the Long Run, Which Statement Is TRUE for a Monopolistically