A monopolistically competitive firm is currently charging a price of $10 and producing 12,000 units/month. It faces monthly fixed costs of $15,000 and has an average variable cost of $6/unit. In the long run, we would expect:
A)The firm to go out of business
B)The price will rise and output will fall
C)The price will fall and output will fall
D)The price will fall and output will rise

Question

​A monopolistically competitive firm is currently charging a price of $10 and producing 12,000 units/month. It faces monthly fixed costs of $15,000 and has an average variable cost of $6/unit. In the long run, we would expect:
A)​The firm to go out of business
B)​The price will rise and output will fall
C)​The price will fall and output will fall
D)​The price will fall and output will rise

Quizplus · Accepted Answer

The Answer of ​A monopolistically competitive firm is currently charging a price of $10 and producing 12,000 units/month. It faces monthly fixed costs of $15,000 and has an average variable cost of $6/unit. In the long run, we would expect:
A)​The firm to go out of business
B)​The price will rise and output will fall
C)​The price will fall and output will fall
D)​The price will fall and output will rise

​A Monopolistically Competitive Firm Is Currently Charging a Price of $10

A Monopolistically Competitive Firm Is Currently Charging a Price of $10