In the long run, which of the following conditions is true for a monopolistically competitive firm?
A)P AC and MR = MC.
B)P = MC and MR AC.
C)P = AC and MR = MC.
D)P MR and P AC.

Question

In the long run, which of the following conditions is true for a monopolistically competitive firm?
A)P > AC and MR = MC.
B)P = MC and MR > AC.
C)P = AC and MR = MC.
D)P > MR and P > AC.

Quizplus · Accepted Answer

In the long run, a monopolistically competitive firm will produce at a point where price equals average cost (P = AC) to make normal profit, and marginal revenue equals marginal cost (MR = MC) for profit maximization.

In the Long Run, Which of the Following Conditions Is