Is it correct to answer that price is 50 and quantity is 50?
Below is demand/MR curve of market and MC/AC curve of a firm in monopolistic competition situation. Show more Below is demand/MR curve of market and MC/AC curve of a firm in monopolistic competition situation. Problem : If this firm operates like a firm in perfect competition what would be the equilibrium price and qunatitiy? I wonder is it possible to automatically adopt P=MC condition to this situation. In this case as the demand curve and MR curve are not horizontal the equation P=MC seems not proper equilibrium. If such condition is adopted the equilibrium quantity seems 45 and price is 55. However as the price is higher than AC at such quantity level this firm acts like a firm in perfect competition seems get profit higher than 0. Is it correct to answer that price is 50 and quantity is 50? In such level this firm seems get 0 profit which means perfect competition is well functioned. Show less