-Fresh Taste, Inc. produces organic breakfast cereals. The market for breakfast cereals is monopolistically competitive. The figure above shows the demand curve that Fresh Taste faces (D) , the company's marginal revenue curve (MR) , its marginal cost curve (MC) , and its average total cost curve (ATC) . Fresh Taste produces ________ thousand boxes of cereals per day and sets a price of ________ a box.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms produce where MR = MC. The demand curve shows the price consumers are willing to pay for that quantity. At 8 thousand boxes, MR = MC, and the price on the demand curve is $3.00.