In the short run,a monopolistically competitive firm continues to increase production _____ if it can at least cover its variable cost.

Question

Quizplus · Accepted Answer

In the short run, a monopolistically competitive firm will continue to increase production until marginal revenue (MR) equals marginal cost (MC). This is because at this point, the firm is maximizing its profit (or minimizing its loss if it is operating at a loss). Continuing to produce beyond this point would result in additional costs that exceed additional revenues, thus reducing profit.

In the Short Run,a Monopolistically Competitive Firm Continues to Increase