Exhibit 24-3 Refer to Exhibit 24-3. Total cost of this profit maximizing monopolistic competitor is represented by the area A)0P₁AQ₂. B)0P₃CQ₂. C)P₃P₁AC. D)P₄P₁AD.

Question

Quizplus · Accepted Answer

Total cost of a monopolistic competitor includes both fixed and variable costs. In the graph, the area above the demand curve (AQ curve) represents total revenue, and the area below the average total cost (ATC) curve represents total variable cost. To find total cost, we need to add the fixed cost to total variable cost. In the graph, the fixed cost is represented by the vertical distance between the ATC curve and the horizontal axis (denoted as FC), and the total cost is represented by the sum of total variable cost and fixed cost, which is the area below the ATC curve and above the horizontal axis (denoted as TC). In option B, the area 0P₃CQ₂ represents total cost.

Exhibit 24-3 Refer to Exhibit 24-3. Total Cost of This Profit Maximizing