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Findind equilbrium for monopolistically competitive firm

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At its current output level of X = 10, a monopolistically competitive firm has MR = 4, MC =4 ,ATC= 6, and P=8. Is this market in long-run equilibrium? If not, please describe the adjustment process necessary to achieve long-run equilibrium.

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Solution Summary

Solution describes the conditions for short term equilibrium conditions for monopolistically competitive firm. It also looks the effect in long run profitability.

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Given that this is a monopolistically competitive firm.

and MR=MC=4
Since the Price P (=8)> ATC=(6)
In this case firm is in earning a profit.
This is a typical case of short term ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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