the graph shown in this answer is the long run under monopolistic competitive market and they have considered it for the short run as well. however in the short run the graph looks different than this as firma are able to earn supernormal profits, whereas here only normal profits can be earned what's the mistake here?
In both parts (i) and (ii), the diagram in the solution is the short-run position. The long-run position is just the standard long-run equilibrium diagram (Figure 8.2 in Chapter 8). I hope this helps
here the AC curve is tangential to the AR curve. this happens only in the long run, as firms can earn only normal profits. how is it the short run equilibrium?
In the diagrams, only AC1 is tangential to the AR curve. This illustrates the initial position. The short-run position is illustrated by the curve AC2, which is not tangential. (Note also that it's not true to say that the AC curve is only tangential to the AR curve in the long run. If a firm is in long-run equilibrium and nothing changes, then it will be tangential whatever time frame we're considering!)
