Figure 12-2

-In Figure 12-2, which of the graphs represents a monopolistic competitor in long-run equilibrium?
A)1
B)2
C)3

Question

Figure 12-2
 
-In Figure 12-2, which of the graphs represents a monopolistic competitor in long-run equilibrium?
A)1 
B)2 
C)3

Quizplus · Accepted Answer

Graph 3 represents a monopolistic competitor in long-run equilibrium because it has a downward-sloping demand curve and a U-shaped average total cost curve. The firm is earning normal profits, indicated by the point where average total cost intersects with demand. The other graphs do not have the characteristics of a monopolistic competitor in long-run equilibrium.

Figure 12-2 -In Figure 12-2, Which of the Graphs Represents a Monopolistic