Which of the following is not characteristic of long-run equilibrium under monopolistic competition?

Question

Quizplus · Accepted Answer

In the long run equilibrium under monopolistic competition, price is equal to or above minimum average total cost but not equal to it. This is because firms incur excess capacity costs due to the inefficiencies of producing a variety of products, each with its own advertising and marketing expenses. Therefore, the optimal output level is less than the one that minimizes average total cost. Marginal cost equals marginal revenue, and price is equal to or exceeding average total cost. Hence, option A is not characteristic of long-run equilibrium under monopolistic competition.

Which of the Following Is Not Characteristic of Long-Run Equilibrium