You are a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. P = MC, P > ATC P > MC, P = ATC Illustrating with graph(s), can the firm possibly be maximising profit? If not, what should it do to increase profit? If the firm is profit-maximising, is the firm in a long-run equilibrium? If not, what will happen to restore long-run equilibrium?

You are a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. P = MC, P > ATC P > MC, P = ATC Illustrating with graph(s), can the firm possibly be maximising profit? If not, what should it do to increase profit? If the firm is profit-maximising, is the firm in a long-run equilibrium? If not, what will happen to restore long-run equilibrium?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter14: Monopolistic Competition And Product Differentiation

Section: Chapter Questions

Problem 5P

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You are hired as a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is maximizing profit, is the market in a long-run equilibrium? If not, what will happen to restore long-run equilibrium? P < MC, P > ATC P > MC, P < ATC P = MC, P > ATC P > MC, P = ATC
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