For a Monopolistically Competitive Firm in Long Run Equilibrium

question 114

Multiple Choice

For a monopolistically competitive firm in long run equilibrium:

• A) marginal revenue equals marginal cost and price equals average cost.
• B) the economic profits it is earning will soon be competed away by entry.
• C) accounting profits are zero and price equals marginal cost.
• D) marginal revenue equals marginal cost and average total cost is minimized.

---

Definitions:

Excess Funds

Surplus money available with an entity after all expenses and obligations have been met, which can be invested or saved for future use.

Ordering Costs

Expenses incurred in placing and receiving orders from suppliers, typically including costs related to processing, shipping, and receiving.

Inventory Held

The goods and materials that a business has in stock and available to sell at a given time.

Credit Policy

The guidelines a company follows to determine the amount and terms of credit to extend to customers.