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

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

Economic Profits

The discrepancy between what a business earns in total revenue versus the sum of its explicit and implicit expenditures.

Monopolistically Competitive

A market structure where many companies sell products that are similar but not identical, leading to competition.

Profit-Maximizing

A strategy where a firm sets its production level to achieve the highest possible profit, where marginal cost equals marginal revenue.