-Given the marginal cost and average total cost curves in Figure 11-6,a monopolistically competitive firm in long-run equilibrium will produce
A)250 units and charge a price of $6
B)less than 250 units and charge a price below $6
C)more than 250 units and charge a price below $6
D)more than 250 units and charge a price above $6
E)less than 250 units and charge a price above $6

Question

-Given the marginal cost and average total cost curves in Figure 11-6,a monopolistically competitive firm in long-run equilibrium will produce
A)250 units and charge a price of $6 
B)less than 250 units and charge a price below $6 
C)more than 250 units and charge a price below $6 
D)more than 250 units and charge a price above $6 
E)less than 250 units and charge a price above $6

Quizplus · Accepted Answer

In long-run equilibrium, a monopolistically competitive firm produces where marginal cost equals marginal revenue, which is less than the quantity where average total cost is minimized. This results in a price above the minimum average total cost, hence less than 250 units and a price above $6.

-Given the Marginal Cost and Average Total Cost Curves in Figure