Figure 16-10
The figure is drawn for a monopolistically-competitive firm.
-Refer to Figure 16-10. As the figure is drawn, the firm is in
A)a short-run equilibrium but it is not in a long-run equilibrium.
B)a long-run equilibrium but it is not in a short-run equilibrium.
C)a short-run equilibrium as well as a long-run equilibrium.
D)neither a short-run equilibrium nor a long-run equilibrium.

Question

Figure 16-10
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-10. As the figure is drawn, the firm is in
A)a short-run equilibrium but it is not in a long-run equilibrium. 
B)a long-run equilibrium but it is not in a short-run equilibrium. 
C)a short-run equilibrium as well as a long-run equilibrium. 
D)neither a short-run equilibrium nor a long-run equilibrium.

Quizplus · Accepted Answer

The figure shows the firm producing where MR = MC, indicating short-run equilibrium. However, the firm is not producing at the minimum point of its average total cost curve in the long run, indicating that it has not achieved long-run equilibrium.

Figure 16-10 The Figure Is Drawn for a Monopolistically-Competitive Firm