You are hired as 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

Which of the following statements is true about the firm?

a. The firm can increase its profit by reducing its output.
b. The firm is in long-run equilibrium.
c. The firm is possibly maximizing profit.

Why is it easier for new entrants to get involved in radical innovations when compared to incumbent firms? a. unlike incumbent firms, new entrants do not have to face the high entry barriers, initially. b. new entrants are embedded in an innovation ecosystem, while incumbent firms are not. c. unlike incumbent firms, new entrants do not have formal organizational structures and processes. d. incumbent firms do not have the advantages of network effects that new entrants have.