For a monopolistic competitor, marginal revenue at its short-run equilibrium price and quantity equals:
A) price.
B) marginal cost.
C) average cost.
D) average revenue.

Question

Quizplus · Accepted Answer

In the short-run equilibrium for a monopolistic competitor, marginal revenue equals marginal cost, not price, average cost, or average revenue. This is because firms maximize profit by producing where marginal revenue equals marginal cost.

For a Monopolistic Competitor, Marginal Revenue at Its Short-Run Equilibrium