Question

In the short-run, the firm will be in equilibrium when (Monopolistic competition) _____________________.

• A. Marginal Revenue=Marginal cost
• B. Average Revenue = Average cost
• C. Total Revenue = Total cost
• D. AR = MR = Price

Answer 1

The correct option is A Marginal Revenue=Marginal cost

Economists tell us that a business can maximize its profit by producing at the level where marginal revenue equals marginal cost, also known as the point of Equilibrium.
As long as marginal revenue is greater than marginal cost, it pays to produce more. Each added unit sold will add more to revenue than to costs.