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Suppose a Monopolistically Competitive Firm Is in Long-Run Equilibrium

question 54

Multiple Choice

Suppose a monopolistically competitive firm is in long-run equilibrium.The firm's demand curve is tangent to its average cost curve at Q = 25.Average cost is minimized at Q = 35,where average cost is $50.Which of the following is true?


Definitions:

Short-Run Total Cost

The total of all costs incurred in the production process when some factors of production are fixed.

Production Function

An equation, table, or graph that shows the maximum output of goods and services that can be produced with varying inputs under certain technological constraints.

Labor

The human effort, both physical and mental, used in the production process.

Average Cost

The cost per unit, determined by dividing the total production costs by the quantity of units produced.

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