Exhibit 25-8

-Refer to Exhibit 25-8.A profit-maximizing monopolistic competitive firm that produces the level of output where MR = MC will produce ______________ units of output and charge a price of ______________.

Question

Exhibit 25-8
 
-Refer to Exhibit 25-8.A profit-maximizing monopolistic competitive firm that produces the level of output where MR = MC will produce ______________ units of output and charge a price of ______________.

Quizplus · Accepted Answer

At the quantity where MR = MC, the firm will produce 6 units of output. At this level of output, the firm will charge a price of $60, which corresponds to the demand curve at the quantity of 6 units. This price is higher than the marginal cost of producing each unit, allowing the firm to earn a positive economic profit. Therefore, choice D) is the correct answer.

Exhibit 25-8 -Refer to Exhibit 25-8.A Profit-Maximizing Monopolistic Competitive Firm That Produces