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

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

P < MC, P < ATC

P > MC, P < ATC

Illustrating with graph(s), can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is profit-maximising, is the firm in a long-run equilibrium? If not, what will happen to restore long-run equilibrium?

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