For a monopolistic competitive firm, which of the following is TRUE in the long run?

Question

Quizplus · Accepted Answer

In the long run, a monopolistic competitive firm will be producing at the minimum point on its ATC curve to remain competitive. However, it will not be producing at the efficient scale, which means that it will not produce at the point where P = MC. Instead, it will have a markup over its marginal cost due to its market power. Therefore, option B is correct, while options A and C are not necessarily true in the long run for a monopolistic competitive firm.

For a Monopolistic Competitive Firm, Which of the Following Is