A firm operating under monopolistic competition is producing at its profit-maximising output but is still incurring a short-run loss. For production to remain viable, which of the following must be true about its average revenue (AR), marginal revenue (MR) and average variable cost (AVC)?
- AAR = MR; AVC > AR
- BAR = MR; AVC < AR
- CAR > MR; AVC > AR
- DAR > MR; AVC < AR