These are the cost and revenue curves associated with a monopolistically competitive firm. According to the graph shown,the monopolistically competitive firm:

Question

These are the cost and revenue curves associated with a monopolistically competitive firm.  According to the graph shown,the monopolistically competitive firm:

Quizplus · Accepted Answer

In the short run, the monopolistically competitive firm should act like a monopolist and produce where marginal revenue equals marginal cost. This is where the firm's output is Q_m and price is P_m, resulting in profits equal to area B. However, in the long run, other firms can enter the market and compete away these profits, driving the firm's price down to the minimum of average total cost at Q_e and resulting in zero economic profits. Therefore, option C is the best choice.

These Are the Cost and Revenue Curves Associated with a Monopolistically