Multiple Choice
Suppose that a monopolistically competitive firm is in long-run equilibrium.The firm's demand curve is tangent to its average cost curve at Q = 25.Average cost is minimized at Q = 35, where average cost is $50.Which of the following is true?
A) This firm charges $50 for the good.
B) This firm charges more than $50 for the good.
C) This firm charges less than $50 for the good.
D) The firm has excess capacity at all output levels greater than 35 units.
E) Average cost is $50 at the profit-maximizing output level.
Correct Answer:
Verified
Correct Answer:
Verified
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