Table 16-4
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.

-Refer to Table 16-4.What price will this firm charge to maximize profit?

Question

Table 16-4
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.
 
-Refer to Table 16-4.What price will this firm charge to maximize profit?

Quizplus · Accepted Answer

The profit-maximizing price is the price at which marginal revenue equals marginal cost. From Table 16-4, we can see that marginal revenue is $8 and marginal cost is $7. Therefore, the profit-maximizing price is $8.

Table 16-4 This Table Shows the Demand Schedule, Marginal Cost, and Average