Table 16-5 This table shows the demand schedule, marginal cost, and average tota
ID: 1102296 • Letter: T
Question
Table 16-5 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm Quantity Price Marginal Cost Average Total Cost $30 $24 $18 $12 $6 $0 $2 $4 $6 $8 $10 $32 $18 $14 $10 $10 2 4 20. Refer to Table 16-5. Which of the following statements regarding this monopolistically competitive firm is correct? a. New firms will enter this market in the long run since firm profits are greater than zero. X b. Firms will leave this market in the long run since firm profits are less than zero. c. This firm is currently in long-run equilibrium. d. This firm is currently in long-run equilibrium, and the firm is producing its efficient scale of output.Explanation / Answer
Tr 24 36 3624
Mr 12 0 -12
Firm is producing approximately 2 units where it's marginal revenue is same as marginal cost. At this point, Price of the product is also same as average total cost.
So, firm is at normal profit and in Long run equilibrium.
Answer is c.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.