The only other possibility is if demand were so elastic that it is horizontal so that the demand and ATC curves are tangent at the point where ATC is minimized which is where ATC = MC.

    For demand to be this elastic however isn't consistent with our description of monopolistic competition where product differentiation is important. This result would only be consistent with perfect competition where there is no product differentiation.

Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved