"In a long-run equilibrium, price is equal to average total cost." This statement applies to
A)competitive markets, but not to monopolistically competitive markets or monopolies.
B)competitive and monopolistically competitive markets, but not to monopolies.
C)competitive markets, monopolistically competitive markets, and monopolies.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

In the long-run equilibrium, both competitive and monopolistically competitive markets have price equal to average total cost due to free entry and exit. Monopolies do not have this condition as they can set prices above average total cost.

"In a Long-Run Equilibrium, Price Is Equal to Average Total