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Which of the following is correct for a monopolistically competitive firm in long-run equilibrium?
A) MC = ATC.
B) MC exceeds MR.
C) P exceeds minimum ATC.
D) P = MC.
Long-Run Equilibrium
A state in which all factors of production and outputs are optimal, allowing for all economic agents to have no incentive to change their behavior.
MC
A term often short for Marginal Cost, which is the cost added by producing one additional unit of a product or service.
MR
Short for Marginal Revenue, which is the additional income earned by selling one more unit of a product or service.
- Ascertain the conditions essential for the establishment of long-run equilibrium in monopolistically competitive market structures.
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Learning Objectives
- Ascertain the conditions essential for the establishment of long-run equilibrium in monopolistically competitive market structures.
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