Figure 101 Shows the Demand, Marginal Revenue, and Cost Curves for for a Monopolistic

question 51

Multiple Choice

Figure 10.1 shows the demand, marginal revenue, and cost curves for a monopolistic competitor. The monopolistic competitor is in:​ ​
Figure 10.1.
​

• A)long-run equilibrium because price equals average total cost.
• B)long-run equilibrium because marginal cost equals marginal revenue.
• C)long-run equilibrium because price exceeds marginal cost.
• D)short-run equilibrium because it is earning a positive economic profit.
• E)short-run equilibrium because price equals average total cost.

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Definitions:

Monopolistic Competition

A market structure in which many firms sell products that are similar but not identical, allowing for elements of competition and product differentiation.

Long-Run Equilibrium

A state where all firms in a market are making zero economic profit, with no incentive for entry or exit, reflecting a balance of supply and demand.

Average Total Cost

The total cost of production divided by the total quantity produced.

Monopolistically Competitive Firms

Companies in a market structure where many firms sell products that are similar but not identical, competing on factors besides price.