In long-run equilibrium, a profit-maximizing firm in a monopolistically competitive industry will produce the quantity of output where
A) ATC = P, MR = MC = P.
B) ATC

Question

In long-run equilibrium, a profit-maximizing firm in a monopolistically competitive industry will produce the quantity of output where
A) ATC = P, MR = MC = P.
B) ATC < P, MR = MC = P.
C) ATC < P, MR + MC < P.
D) ATC = P, MR = MC < P.

Quizplus · Accepted Answer

In long-run equilibrium, a monopolistically competitive firm produces where MR = MC, and the price equals ATC, ensuring zero economic profit. However, price is greater than MR and MC due to the downward-sloping demand curve.

In Long-Run Equilibrium, a Profit-Maximizing Firm in a Monopolistically Competitive