Monopolistic competition

The diagram below shows a firm operating under conditions of monopolistic competition in the long run.

Monopolistic Competition Long-Run Equilibrium

Which of the following statements is correct?

The firm is productively efficient because the tangency point $T$ is located at the minimum point of its Average Cost ( $A C$ ) curve.

The firm is allocatively efficient because it is producing at the output level $Q_1$ where Price equals Marginal Cost.

The firm makes only normal profit because at the profit-maximising output $Q_1$ , Average Revenue is equal to Average Cost ( $P_1$ ).

At the profit-maximising output $Q_1$ , the firm is operating in the price-inelastic range of its demand curve.

Monopolistic competition Questions

The diagram below shows a firm operating under conditions of monopolistic competition in the long run.

Monopolistic Competition Long-Run Equilibrium

Which of the following statements is correct?

The firm is productively efficient because the tangency point $T$ is located at the minimum point of its Average Cost ( $A C$ ) curve.

The firm is allocatively efficient because it is producing at the output level $Q_1$ where Price equals Marginal Cost.

The firm makes only normal profit because at the profit-maximising output $Q_1$ , Average Revenue is equal to Average Cost ( $P_1$ ).

At the profit-maximising output $Q_1$ , the firm is operating in the price-inelastic range of its demand curve.