Question

Draw a graph to show a monopolistic firm that is making zero profits. Is this an...

Draw a graph to show a monopolistic firm that is making zero profits. Is this an efficient price quantity combination? why or why not?

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Answer #1

can be mentioned that the above graph shows the monopolist competitive scenario in the long run and this is because of the fact that in the long run what happens in the monopolistic competition is that the price is equal to that of average total cost so that the firm will earn zero economic profit and this is efficient scale of production because it is similar to that of perfectly competitive market where there is no benefit and optimal amount of production takes place at break even

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