Exhibit 25-6

-Refer to Exhibit 25-6.The monopolistic competitor is producing __________ quantity of output and charging a price of __________.

Question

Exhibit 25-6
 
-Refer to Exhibit 25-6.The monopolistic competitor is producing __________ quantity of output and charging a price of __________.

Quizplus · Accepted Answer

The monopolistic competitor is producing a quantity of output where marginal cost (MC) equals marginal revenue (MR), which is Q₁. The monopolistic competitor is charging a price where the demand curve (D) is tangent to the average total cost (ATC) curve, which is P₂ (since ATC is lower than the price, the firm is earning economic profits). Therefore, the answer is C, Q₁ and P₂.

Exhibit 25-6 -Refer to Exhibit 25-6.The Monopolistic Competitor Is Producing __________ Quantity