Which of the following is correct? Answer In the long run, a firm in monopolisti

Question

Which of the following is correct? Answer In the long run, a firm in monopolistic competition maximizes its profit at a point where price is equal to average total cost but the average total cost is not minimized. A firm in perfect competition operates at maximum average total cost in the long run. A firm in monopolistic competition does not have excess capacity in the long run. In the long run, a firm in monopolistic competition makes zero economic profit and its price is equal to the minimum average total cost. In the long run, a firm in monopolistic competition can make an economic profit because of product differentiation.

Explanation / Answer

The correct answer is : A firm in monopolistic competition can make an economic profit because of product differentiation.

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