Exhibit 25-8

-Refer to Exhibit 25-8.The maximum profits earned by a monopolistic competitive firm will be

Question

Exhibit 25-8
 
-Refer to Exhibit 25-8.The maximum profits earned by a monopolistic competitive firm will be

Quizplus · Accepted Answer

The maximum profits earned by a monopolistic competitive firm occur where marginal revenue (MR) equals marginal cost (MC), which is at an output level of 6 units. At that level, the price is $40 and the total revenue is $240. The total cost of producing 6 units is $100 ($60 fixed costs plus $40 variable costs * 6 units), leaving a total profit of $140 ($240 total revenue - $100 total cost). Therefore, option C is the correct answer.

Exhibit 25-8 -Refer to Exhibit 25-8.The Maximum Profits Earned by a Monopolistic