In equilibrium under monopolistic competition: 1)Marginal revenue exceeds averag

Question

In equilibrium under monopolistic competition: 1)Marginal revenue exceeds average revenue 2)marginal revenue exceeds marginal cost 3)Marginal revenue is equal to marginal cost 4)marginal revenue is less than marginal cost In equilibrium under monopolistic competition: 1)Marginal revenue exceeds average revenue 2)marginal revenue exceeds marginal cost 3)Marginal revenue is equal to marginal cost 4)marginal revenue is less than marginal cost 1)Marginal revenue exceeds average revenue 2)marginal revenue exceeds marginal cost 3)Marginal revenue is equal to marginal cost 4)marginal revenue is less than marginal cost

Explanation / Answer

Under Monopolistic competition, a firm is said to be in equilibrium (maximizing its profit) when it produces that level of output at which marginal cost equals marginal revenue.

So, in equilibrium under monopolistic competition, marginal revenue is equal to marginal cost.

Hence, the correct answer is option (3).

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