In the short run, the price charged by a monopolistically competitive firm attempting to maximize profits
A) must be less than ATC.
B) must be more than ATC.
C) may be either equal to ATC, less than ATC, or more than ATC.
D) must be equal to ATC.

Question

Quizplus · Accepted Answer

In the short run, a monopolistically competitive firm can charge a price that may be equal to, less than, or more than ATC, depending on various factors such as the market demand, the level of product differentiation, and the degree of competition. However, the firm must always charge a price higher than their marginal cost to maximize profits in the short run. Therefore, the correct choice is C.

In the Short Run, the Price Charged by a Monopolistically