Figure 8.1
-If Figure 8.1 depicts the current situation for a monopolistically competitive firm, then in the long run we expect

Question

Quizplus · Accepted Answer

In the long run, we expect the firm's average cost of production to rise above AC₁ due to the inability to achieve economies of scale and the pressure of competition to keep prices down. Therefore, choice C is correct. A is incorrect because the firm's goal is to maximize profits, not to charge a higher price than necessary. B is incorrect because the firm will likely produce less than Q₁ due to the pressure of competition on prices. D is incorrect because economic profits will attract new firms to enter the market, increasing competition and reducing profits in the long run.

Figure 8.1 -If Figure 8.1 Depicts the Current Situation for a Monopolistically