-(Exhibit: The Restaurant Market) The exhibit shows curves facing a typical restaurant in a community. Assume that the market is characterized by many firms, differentiated products, easy entry and easy exit. For the restaurant shown here the profit-maximizing price is:

Question

Quizplus · Accepted Answer

In a monopolistic competition market, like the restaurant market described, the profit-maximizing price is where marginal cost (MC) equals marginal revenue (MR). This typically corresponds to the price on the demand curve directly above this intersection, which is P₂.

-(Exhibit: the Restaurant Market) the Exhibit Shows Curves Facing a Typical