Question

Suppose that a firm in monopolistically competitive market is producing 30 units of output. At this level of production, the firm charges $50 per unit. Its marginal cost is $24 and marginal revenue is $24, and average cost is $20 per unit. Given this information, in the long run you would expect a. firms to exit the market. b. price to increase. c. firms to maintain their current output and price. d. firms to enter the market

Answer 1

b. price to increase

Step-by-step explanation:

As the market total revenue still greater than the total costs but the marginal revenue equals the marginal cost then the price most increase in order to continue to exploit the market.