Refer to the following graph to answer the following questions:

-The short-run equilibrium for a monopolistically competitive firm is at price equals $29,average total cost equals $22,and marginal cost equals marginal revenue equals $18.Which of the following is true?
A) Per-unit profit is $11.
B) More firms will be attracted into the industry.
C) The firm could increase the price and increase profits.
D) The firm could decrease the price and increase profits.
E) The firm is operating in the upward-sloping portion of average total cost (AT

Question

Refer to the following graph to answer the following questions:
 
-The short-run equilibrium for a monopolistically competitive firm is at price equals $29,average total cost equals $22,and marginal cost equals marginal revenue equals $18.Which of the following is true?
A) Per-unit profit is $11. 
B) More firms will be attracted into the industry. 
C) The firm could increase the price and increase profits. 
D) The firm could decrease the price and increase profits. 
E) The firm is operating in the upward-sloping portion of average total cost (AT

Quizplus · Accepted Answer

In the short-run equilibrium, the firm is making a profit since the price ($29) is greater than the average total cost ($22), indicating a per-unit profit of $7 ($29 - $22). This profit signals that the industry is attractive, leading to the entry of more firms into the market until profits are driven to zero in the long run.

Refer to the Following Graph to Answer the Following Questions