A Monopolistic Competitor Is in Long-Run Equilibrium When

question 257

Multiple Choice

A monopolistic competitor is in long-run equilibrium when

• A) economic profits are equal to zero and the average total cost curve is tangent to the demand curve.
• B) economic profits are equal to zero and the marginal cost curve is tangent to the demand curve.
• C) economic profits are greater than zero and the average total cost curve is tangent to the demand curve.
• D) economic profits are greater than zero and the marginal cost curve is tangent to the demand curve.

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Definitions:

Operating Leverage

The ratio of fixed costs to total costs. The higher a firm’s operating leverage, the greater will be the variability of profits for a given change in sales.

Income Tax

A tax levied by governments on individuals or entities based on their income or profits.

Reward System

Programs and strategies to recognize and compensate employees for their performance and contribution to the organization.

Performance Measures

Metrics used to evaluate the efficiency, effectiveness, and performance of an organization's activities or employees.