The figure below shows the revenue and cost curves of a monopolistically competitive firm.Figure: 12.2
In the figure,
D: Demand curve
MR: Marginal revenue curve
ATC 1 and ATC 2 : Average total cost curves
MC: Marginal cost curve
-In Figure 12.2, if the market is monopolistically competitive, which quantity represents long-run equilibrium for the firm?
A)15
B)Between 15 and 40
C)40
D)55
E)60

Question

The figure below shows the revenue and cost curves of a monopolistically competitive firm.Figure: 12.2
  In the figure,
D: Demand curve
MR: Marginal revenue curve
ATC 1 and ATC 2 : Average total cost curves
MC: Marginal cost curve
-In Figure 12.2, if the market is monopolistically competitive, which quantity represents long-run equilibrium for the firm?
A)15 
B)Between 15 and 40 
C)40 
D)55 
E)60

Quizplus · Accepted Answer

In a monopolistically competitive market, firms will produce at the quantity where marginal cost (MC) equals marginal revenue (MR) and where price equals average total cost (ATC) in the long run, ensuring zero economic profit. This equilibrium is represented by the quantity where these conditions are met, which is at 40.

The Figure Below Shows the Revenue and Cost Curves of a Monopolistically