In equilibrium under monopolistic competition:
A) marginal revenue exceeds average revenue.
B) marginal revenue exceeds marginal cost.
C) marginal revenue is equal to marginal cost.
D) marginal revenue is less than marginal cost.

Question

Quizplus · Accepted Answer

In equilibrium under monopolistic competition, the firm produces where marginal revenue is equal to marginal cost. This helps the firm to maximize its profit as it produces the quantity where the extra revenue earned from producing an additional unit equals the extra cost incurred. Therefore, the correct answer is C - marginal revenue is equal to marginal cost.

In Equilibrium Under Monopolistic Competition