Figure 10.1 shows the demand, marginal revenue, and cost curves for a monopolistic competitor. The monopolistic competitor is in:
Figure 10.1.

Question

Figure 10.1 shows the demand, marginal revenue, and cost curves for a monopolistic competitor. The monopolistic competitor is in:​ ​
Figure 10.1.
​

Quizplus · Accepted Answer

The graph shows that the demand curve intersects the average total cost curve and the marginal cost curve at their respective points of minimum. This indicates that the firm is producing at the efficient scale in the long run. However, in the short run, the firm is earning positive economic profits as its price exceeds its average variable cost. Therefore, the best choice is D, as it correctly identifies the short-run equilibrium of the monopolistic competitor as earning positive economic profits.

Figure 101 Shows the Demand, Marginal Revenue, and Cost Curves for for a Monopolistic