The Long-Run Equilibrium of a Monopolistically Competitive Firm Is Characterized

question 218

Multiple Choice

The long-run equilibrium of a monopolistically competitive firm is characterized by

• A) a tangency of the average total cost curve with the firm's demand curve.
• B) price equal to marginal cost.
• C) production at the minimum point of the firm's average total cost curve.
• D) production at the minimum point of the firm's average variable cost curve.

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Definitions:

Marginal Product

The additional output resulting from a one-unit increase in the use of a particular input, holding all other inputs constant.

Monopsony

A market condition where there is only one buyer for a product or service, giving them significant control over prices.

Hourly Wage

The rate an employee is paid for each hour of work.

Labor-Supply Curve

A graphical representation showing the relationship between the amount of labor workers are willing to provide at different wage rates.