In the short run, a firm operating as a monopolistic competitor will produce to the point at which

Question

Quizplus · Accepted Answer

Monopolistic competitors operate by producing where marginal revenue (MR) equals marginal cost (MC) in the short run, as this is where profit is maximized. Choice A (MR = ATC) and B (MC = ATC) are incorrect because they do not take into account the profit-maximizing point, and choice C (P = MC) is incorrect as monopolistic competitors are not price takers, meaning they have some degree of market power to set prices above marginal cost. Therefore, choice D (MR = MC) is the best answer as it reflects the profit-maximizing point for a monopolistic competitor.

In the Short Run, a Firm Operating as a Monopolistic