A monopolistically competitive firm maximizes profits in the short run

Question

Quizplus · Accepted Answer

A monopolistically competitive firm will maximize profits in the short run by producing the quantity where marginal revenue (MR) equals marginal cost (MC). This is because MR represents the additional revenue earned by producing one more unit, and MC represents the additional cost of producing one more unit. When these two are equal, the firm is producing at the point where producing one more unit would no longer increase profits.

A Monopolistically Competitive Firm Maximizes Profits in the Short Run