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 the long-run, in a monopolistically competitive market:
A)marginal revenue is greater than average revenue.
B)price equals marginal cost.
C)price equals minimum average total cost.
D)the firms earn positive economic profits.
E)resources are inefficiently allocated .

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 the long-run, in a monopolistically competitive market:
A)marginal revenue is greater than average revenue. 
B)price equals marginal cost. 
C)price equals minimum average total cost. 
D)the firms earn positive economic profits. 
E)resources are inefficiently allocated .

Quizplus · Accepted Answer

In the long-run, monopolistically competitive firms produce where price is greater than marginal cost, leading to inefficient resource allocation.

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