If a monopolistically competitive firm decides that its cost and revenue data indicate that it should not shut down, it will end up producing where
A) MR AVC
B) MR ATC
C) MR MC
D) MR = P = ATC = MC
E) MR = MC

Question

If a monopolistically competitive firm decides that its cost and revenue data indicate that it should not shut down, it will end up producing where
A) MR > AVC
B) MR > ATC
C) MR > MC
D) MR = P = ATC = MC
E) MR = MC

Quizplus · Accepted Answer

In a monopolistically competitive market, firms produce where marginal revenue (MR) equals marginal cost (MC) to maximize profit. This is the profit-maximizing condition for firms in most market structures, including monopolistic competition.

If a Monopolistically Competitive Firm Decides That Its Cost and Revenue