If ________, then a profit-maximizing, monopolistically competitive firm earns negative economic profits.

A) P > ATC
B) P < ATC
C) P = ATC
D) All of the above are possible.

Economic Profits

The difference marked between entirety of income and the totality of expenditures, accounting for both disclosed and indirect costs.

Monopolistically Competitive

Refers to a market structure where many firms sell products that are similar but not identical, allowing for some degree of market power due to differentiation.

Profit-Maximizing

A strategy or point at which a business achieves its highest possible profit under given conditions.