Question: The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a monopolistically competitive firm are shown in Figure 15P-4. a. Plot

The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a monopolistically competitive firm are shown in Figure 15P-4.

a. Plot the profit-maximizing price and quantity on the graph.

b. Is this firm earning zero, positive, or negative profits? Why?

c. Is this firm in a long-run equilibrium?

Figure 15P-4:

Price/Cost MC ATC AVC P= AR = MR Quantity

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