Suppose a monopolistically competitive firm is making a profit,but it can increase its profits by increasing output.At the current level of output:
A)marginal revenue is greater than marginal cost.
B)price is less than marginal cost.
C)price is less than average total cost.
D)marginal revenue is less than marginal cost.

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, if a firm can increase its profits by increasing output, it means that the additional revenue from selling one more unit (marginal revenue) is greater than the additional cost of producing that unit (marginal cost). This is because a firm will continue to increase output as long as the revenue from selling an additional unit is greater than the cost of producing that additional unit.

Suppose a Monopolistically Competitive Firm Is Making a Profit,but It