Asked by Florence Nichole Rogan on Jun 01, 2024
Verified
In the long run, the price charged by the monopolistically competitive firm attempting to maximize profits
A) must be less than ATC.
B) must be more than ATC.
C) may be either equal to ATC, less than ATC, or more than ATC.
D) will be equal to ATC.
ATC
Average Total Cost; the total cost of production (fixed and variable costs combined) divided by the number of units produced.
Price Charged
The amount of money a buyer has to pay to acquire a product or service from a seller.
- Gain insight into the pricing tactics of monopolistically competitive entities during both immediate and extended timeframes.
- Recognize the conditions for long-run equilibrium in monopolistically competitive markets.
Verified Answer
ZK
Zybrea KnightJun 04, 2024
Final Answer :
D
Explanation :
In the long run, a monopolistically competitive firm will produce at a point where price equals average total cost (ATC) to maximize profits, due to the entry and exit of firms in the market which erodes economic profits to zero.
Learning Objectives
- Gain insight into the pricing tactics of monopolistically competitive entities during both immediate and extended timeframes.
- Recognize the conditions for long-run equilibrium in monopolistically competitive markets.
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