Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?
A)P = AR
B)MR = MC
C)P MC
D)All of the above are correct.

Question

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium?
A)P = AR
B)MR = MC
C)P > MC
D)All of the above are correct.

Quizplus · Accepted Answer

In short-run equilibrium, a monopolistically competitive firm will produce where marginal revenue (MR) equals marginal cost (MC), and price (P) will be greater than marginal cost (MC). Additionally, price will equal average revenue (AR) because the demand curve is downward sloping.

Which of the Following Conditions Is Characteristic of a Monopolistically