The diagram below shows a firm operating under conditions of monopolistic competition in the short run.
Which of the following statements is correct?
The firm is allocatively efficient because it is producing where Price=MC\text{Price} = \text{MC}Price=MC.
The firm is making supernormal profits represented by the area C1P1ABC_1P_1ABC1P1AB.
The firm produces at the minimum point of its Average Cost curve.
At the profit-maximising output Q1Q_1Q1, the firm is operating in the price-inelastic range of its demand curve.
