When managers of monopolistically competitive firms solve for the profit- maximizing quantity, they are determining the market quantity.

Question

Quizplus · Accepted Answer

Managers of monopolistically competitive firms cannot determine the market quantity as they do not have control over the market demand curve. They can only determine the quantity they will produce and sell at a profit-maximizing price. The market quantity is determined by the interaction of all firms in the industry and the market demand curve.

When Managers of Monopolistically Competitive Firms Solve for the Profit-