Which of the following statements about a firm in long-run equilibrium is true? A) P = MC for firms in both monopolistic competition and perfect competition. B) MR P for a firm in monopolistic competition, and P = ATC for a firm in perfect competition. C) P MC for a firm in monopolistic competition, and P = ATC for a firm in perfect competition. D) P = MC for a firm in perfect competition, and P

Question

Which of the following statements about a firm in long-run equilibrium is true?
A) P = MC for firms in both monopolistic competition and perfect competition.
B) MR > P for a firm in monopolistic competition, and P = ATC for a firm in perfect competition.
C) P > MC for a firm in monopolistic competition, and P = ATC for a firm in perfect competition.
D) P = MC for a firm in perfect competition, and P < ATC for a firm in monopolistic competition.
E) Both answers A and B are correct.

Quizplus · Accepted Answer

In long-run equilibrium, a firm in monopolistic competition will have P > MC due to its market power, while a firm in perfect competition will have P = MC as it is a price taker. Both types of firms will produce where P = ATC to ensure maximum profit. Therefore, statement C is correct.

Which of the Following Statements About a Firm in Long-Run