Use the figure below to answer the following questions. Figure 13.2.3
-Refer to Figure 13.2.3.Assume this firm faces demand curve D₁.To maximize economic profit,this firm in monopolistic competition will charge a price of ________ and produce an output of ________ units.

Question

Use the figure below to answer the following questions.

Figure 13.2.3
-Refer to Figure 13.2.3.Assume this firm faces demand curve D₁.To maximize economic profit,this firm in monopolistic competition will charge a price of ________ and produce an output of ________ units.

Quizplus · Accepted Answer

The firm will choose the price and output where its marginal cost (MC) curve intersects the marginal revenue (MR) curve derived from the demand curve D₁. This intersection determines the profit-maximizing output level. The firm will then charge the highest price consumers are willing to pay for that quantity, which can be found by moving up to the demand curve from the MC=MR point. Without the specific figure, the correct answer typically involves understanding this principle, but based on the information provided, we assume choice A is correct as it might correspond to the profit-maximizing condition described.

Use the Figure Below to Answer the Following Questions