Question

consider a firm operating with the following: price = 10; mr = 10; mc = 10; atc = 10. this firm is: a. a monopolist for a product with a relatively inelastic demand. b. perfectly competitive in long - run equilibrium. c. an example of monopolistic competition. d. making an economic profit of 10.

Explanation:

1. For a monopolist, price > MR, which does not match the given data (price = MR = 10), so option a is incorrect.
2. In long-run equilibrium for a perfectly competitive firm, the conditions are: price = MR = MC = ATC, which exactly matches the given values (10 = 10 = 10 = 10).
3. In monopolistic competition, long-run equilibrium has price = ATC but price > MR, which does not match the given data, so option c is incorrect.
4. Economic profit per unit is price - ATC = 10 - 10 = 0, so total economic profit is 0, not 10, making option d incorrect.

Answer:

b. perfectly competitive in long-run equilibrium.