In Long-Run Equilibrium in Monopolistic Competition

question 236

Multiple Choice

In long-run equilibrium in monopolistic competition:

• A) price is greater than average total cost.
• B) price is equal to average total cost at an output below where average total cost is minimized.
• C) price is equal to average total cost at its minimum.
• D) price is equal to average total cost at an output above where average total cost is minimized.

Recognize the conditions under which long-run equilibrium is achieved in a purely competitive market.

Grasp the concept of resource allocation efficiency in the context of marginal cost and price equality.

Understand the implications of changes in industry size on resource prices and production costs.

Relate concepts of economic profits, losses, and break-even conditions to firm behavior and market adjustments.

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