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5. You are hired as the consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average

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5. You are hired as the consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is profit maximizing, is the firm in a long-run equi- librium? If not, what will happen to restore long-run equilibrium? a. P ATC b. P > MC, P ATC d. P > MC, P = ATC8. The market for peanut butter in Nutville is monopo- listically competitive and in long-run equilibrium. One day, consumer advocate Skippy Jif discovers that all brands of peanut butter in Nutville are identical. Thereafter, the market becomes perfectly competitive and again reaches its long-run equilibrium. Using an appropriate diagram, explain whether each of the following variables increases, decreases, or stays the same for a typical firm in the market. a. price b. quantity c. average total cost d. marginal cost e. prot

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