Which of the following is true of monopolistic competition in long-run equilibrium?
A) P = MR and P = MC
B) P ATC and MR = MC
C) P = ATC and MR = MC
D) P = ATC and P = MC
E) P ATC and P MR

Question

Which of the following is true of monopolistic competition in long-run equilibrium?
A) P = MR and P = MC
B) P > ATC and MR = MC
C) P = ATC and MR = MC
D) P = ATC and P = MC
E) P > ATC and P > MR

Quizplus · Accepted Answer

In long-run equilibrium under monopolistic competition, firms will produce where marginal revenue (MR) equals marginal cost (MC), which will also result in price (P) being equal to average total cost (ATC). This differs from perfect competition where P equals both MR and MC. Therefore, choice C is the correct answer.

Which of the Following Is True of Monopolistic Competition in Long-Run