Long-run equilibrium under monopolistic competition is similar to that under perfect competition in that
A)firms produce at the minimum point of their average cost curves.
B)price equals marginal cost.
C)firms earn normal profits.
D)price equals marginal revenue.

Question

Quizplus · Accepted Answer

In long-run equilibrium under monopolistic competition, firms earn normal profits due to free entry and exit, similar to perfect competition. However, unlike perfect competition, firms do not produce at the minimum point of their average cost curves, and price does not equal marginal cost or marginal revenue.

Long-Run Equilibrium Under Monopolistic Competition Is Similar to That Under