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The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a monopolistically competitive firm are shown in the figure below

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The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a monopolistically competitive firm are shown in the figure below. Instructions: Use the tool provided 'Pt. A' to identify the profit-maximizing quantity and price. Price/Cost $50 Tools MC $40 Pt. A ATC $30 AVC $20 $10 D MR 0 10 20 30 40 50 Quantity We know this firm is earning positive profits because P = ATC This indicates that this firm is not in a long-run equilibrium.