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?

• A)This firm charges $50 for the good.
• B)This firm charges more than $50 for the good.
• C)This firm charges less than $50 for the good.
• D)The firm has excess capacity at all output levels greater than 35 units.
• E)Average cost is $50 at the profit-maximizing output level.

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