Asked by Shaan Sanghera on Jul 03, 2024
Verified
In the short run, the price charged by a 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) must be equal to ATC.
ATC
Average Total Cost, which is the total cost of production divided by the quantity of output produced.
Price Charged
The amount of money demanded for a product or service in the market.
- Understand the pricing strategies employed by firms in monopolistic competition over short and long-term periods.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
C
Explanation :
In the short run, a monopolistically competitive firm may operate at a point where price is equal to, less than, or more than average total cost (ATC), depending on the demand for its differentiated product and its cost structure.
Learning Objectives
- Understand the pricing strategies employed by firms in monopolistic competition over short and long-term periods.