In a long-run equilibrium in a monopolistically competitive market,do firms produce at the level of output that minimizes average total cost over all levels of output?

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, firms have some market power to set prices, which means they don't produce at the level of output that minimizes average total cost over all levels of output. Instead, they produce at the level of output where marginal revenue equals marginal cost, which is lower than the minimum of average total cost. This leads to higher prices than in a perfectly competitive market, but also to product differentiation and variety. Therefore, choice C is the correct answer.

In a Long-Run Equilibrium in a Monopolistically Competitive Market,do Firms