If the Average Total Cost curve of a firm in monopolistic competition happens to be above the demand curve, it means:
A)the firm will have to sell a lot in order to make a profit
B)the firm will have to sell at a very high price in order to make a profit
C)other firms are performing better in the market than the firm depicted in the diagram
D)that firms in that industry will be incurring losses in the short run

Question

Quizplus · Accepted Answer

If the Average Total Cost (ATC) curve is above the demand curve, it means that the price at which the firm can sell its product (determined by the demand curve) is lower than the average cost of producing that product. Therefore, the firm will be incurring losses, as it cannot cover its average total costs at any level of output.

If the Average Total Cost Curve of a Firm in Monopolistic