In monopolistic competition in long run equilibrium, the price will be equal to:
A)the marginal cost
B)marginal revenue
C)average variable cost
D)average total cost

Question

Quizplus · Accepted Answer

In the long run equilibrium of monopolistic competition, firms face a downward-sloping demand curve and have some degree of market power, but due to the entry and exit of firms, they end up making zero economic profit. This condition is met when price equals average total cost (ATC).

In Monopolistic Competition in Long Run Equilibrium, the Price Will