Suppose a monopolistically competitive firm is in long-run equilibrium. The firm's demand curve is tangent to its average cost curve at Q = 25. Average cost is minimized at Q = 35, where average cost is $50. Which of the following is true?
A) This firm maximizes profit at an output level of 25 units.
B) This firm maximizes profit at an output level of 35 units.
C) This firm maximizes profit at an output level less than 25 units.
D) This firm maximizes profit at an output level greater than 35 units.
E) This firm incurs economic loss in the long run.
Correct Answer:
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