The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2

-The short-run equilibrium position for a firm in monopolistic competition is the point at which the firm's marginal-cost curve intersects its marginal-revenue curve from above.

Question

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2
 
-The short-run equilibrium position for a firm in monopolistic competition is the point at which the firm's marginal-cost curve intersects its marginal-revenue curve from above.

Quizplus · Accepted Answer

The statement describes the equilibrium position for a firm under pure monopoly, not monopolistic competition. In monopolistic competition, the equilibrium occurs where the firm's marginal revenue equals its marginal cost, but this may not necessarily be from above.

The Table Below Shows the Payoff (Profit) Matrix of Firm