When a Monopolistically Competitive Firm Is in Long-Run Equilibrium

question 20

Multiple Choice

When a monopolistically competitive firm is in long-run equilibrium,

• A) P = MC = ATC.
• B) MR = MC and minimum ATC > P.
• C) MR > MC and P = minimum ATC.
• D) MR = MC and P > minimum ATC.

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Definitions:

Total Capitalization

The sum of a company's long-term debt, equity, and retained earnings, reflecting the total funding sourced from investors and creditors.

Debt-Equity Ratio

A financial ratio used to understand a company's leverage, by dividing its complete liabilities by the equity available to shareholders.

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to gauge the relative value of a stock.

Earnings Per Share

A profitability measure that indicates the portion of a company's profit allocated to each outstanding share of common stock, calculated as net income minus dividends on preferred stock divided by the average outstanding shares.