Asked by

savannah Alston
on Nov 16, 2024

verifed

Verified

Which of the following conditions is characteristic of a monopolistically competitive firm in both the short run and the long run?

A) P > MC
B) MC = ATC
C) P < MR
D) P = ATC

P > MC

Indicates a situation where the price (P) of a good is greater than the marginal cost (MC) of producing it, suggesting the potential for economic profits.

Short Run

A time period in economics during which at least one factor of production is fixed, limiting the ability of the business to adjust to market changes fully.

Monopolistically Competitive Firm

A type of firm in a market structure where many companies sell products that are similar but not identical, and each has some control over its price.

  • Determine what conditions favor the maximization of profits in diverse market formulations.
  • Assess the economic effects of setting prices higher than the marginal cost.
verifed

Verified Answer

JA
Jesse AmsonNov 19, 2024
Final Answer:
Get Full Answer