Below is a graphical illustration of a typical firm operating in a monopolistically competitive industry:

-Refer to the graph above to answer this question.What area graphically represents a profit-maximizing firm's total cost?

Question

Below is a graphical illustration of a typical firm operating in a monopolistically competitive industry:
 
-Refer to the graph above to answer this question.What area graphically represents a profit-maximizing firm's total cost?

Quizplus · Accepted Answer

The total cost is represented by the area below the total cost curve and above the horizontal axis. The profit-maximizing firm will produce at the output level where marginal cost equals marginal revenue. This is represented by the point where the total cost curve is tangent to the marginal cost curve. The area below the total cost curve and above the horizontal axis up to this point represents the total cost of production.

Below Is a Graphical Illustration of a Typical Firm Operating