Figure 17-4

-Refer to Figure 17-4.Panel (b)is consistent with a firm in a monopolistically competitive market that is

Question

Figure 17-4
 
-Refer to Figure 17-4.Panel (b)is consistent with a firm in a monopolistically competitive market that is

Quizplus · Accepted Answer

Panel (b) shows that the firm is producing at a point where marginal cost (MC) equals marginal revenue (MR), which is not the efficient scale of output. The firm could increase its profit by producing at a higher level of output. Therefore, the firm is not in long-run equilibrium. Additionally, the firm is earning a positive economic profit as the price (P) is greater than average total cost (ATC).

Figure 17-4 -Refer to Figure 17-4.Panel (B)is Consistent with a Firm in with a Firm