Which statement is TRUE for a monopolistically competitive firm operating in the long run?
A) Price is equal to marginal cost.
B) The firm earns an economic profit.
C) Price is greater than marginal cost.
D) The firm's demand curve is highly inelastic.

Question

Quizplus · Accepted Answer

In the long run, a monopolistically competitive firm faces a downward-sloping demand curve, which allows it to set a price that is greater than marginal cost. This is unlike perfect competition, where price equals marginal cost in the long run.

Which Statement Is TRUE for a Monopolistically Competitive Firm Operating