In the short run, a firm operating in a monopolistically competitive market
A)produces an output level where marginal revenue equals average total cost.
B)produces an output where marginal revenue equals marginal cost, and the price is determined by demand.
C)must earn zero economic profits.
D)maximizes revenues as well as profits.

Question

Quizplus · Accepted Answer

In the short run, a firm in a monopolistically competitive market produces where marginal revenue equals marginal cost, similar to firms in other market structures. The price at which they sell their product is then determined by the demand curve at that quantity. This is a fundamental principle of microeconomics that applies across different market structures for profit-maximizing firms.

In the Short Run, a Firm Operating in a Monopolistically