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How do you graph a monopolistically competitive firm with a short-run profit?

Posted on April 16, 2014 at 7:45 PM

The cost curves of a monopolistically competitive firm look similar to a monopoly firm's curves. However, by definition monopolistic competition (many firms) is very different from a monopoly (one firm).

To graph a monopolistically competitive firm earning a short-run economic profit, the price must exceed the average total cost curve at the MR=MC level of output.

In the long run, more firms will enter the industry casuing the firm to break even.

In this No Bull Review video, you will learn how to graph a firm with a short-run profit under monopolistic competition.

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AP Microeconomics Unit 2 Product Markets 

Categories: AP Microeconomics, Micro Unit 2 Product Markets

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