When a profit-maximising firm in a monopolistically competitive market is producing the long-run equilibrium quantity:

Question

Quizplus · Accepted Answer

In the long-run equilibrium of a monopolistically competitive market, firms earn zero economic profits. At this point, the demand curve will be tangent to the average total cost curve, indicating that the firm is producing at the minimum point of its average total cost curve. Additionally, since the firm is maximizing profits, it will also produce at the point where marginal revenue equals marginal cost. Therefore, choice B correctly describes the characteristics of a firm in long-run equilibrium in a monopolistically competitive market.

When a Profit-Maximising Firm in a Monopolistically Competitive Market Is