Long-Run Equilibrium Under Monopolistic Competition Is Similar to That Under

question 10

Multiple Choice

Long-run equilibrium under monopolistic competition is similar to that under perfect competition in that

• A)firms produce at the minimum point of their average cost curves.
• B)price equals marginal cost.
• C)firms earn normal profits.
• D)price equals marginal revenue.

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Definitions:

Mixed Cost

A cost that contains both variable and fixed cost elements, meaning part of the cost changes with the level of activity while another part remains constant.

Selling

Activities or processes involved in promoting and exchanging goods or services for money, including marketing and negotiation.

Administrative

Relates to the daily operations and management tasks within an organization, including paperwork and office procedures.

Fixed Cost Element

A cost that does not vary with the level of production or sales, such as rent, salaries, and insurance expenses.