Exhibit 10-2 A monopolistic competitive firm
-As presented in Exhibit 10-2, the long-run profit-maximizing output for the monopolistic competitive firm is:

Question

Exhibit 10-2 A monopolistic competitive firm 
-As presented in Exhibit 10-2, the long-run profit-maximizing output for the monopolistic competitive firm is:

Quizplus · Accepted Answer

In the long run, the monopolistic competitive firm will produce where marginal revenue (MR) equals marginal cost (MC) and charge a price equal to the demand for that quantity. In Exhibit 10-2, we can see that the MC curve intersects the MR curve at 200 units per week. At this output level, the price charged will be $12, which is equal to the demand for 200 units. This will result in zero economic profit in the long run, as the average total cost (ATC) curve also intersects the demand curve at this quantity and price. Therefore, the long-run profit-maximizing output for the monopolistic competitive firm is 200 units per week.

Exhibit 10-2 a Monopolistic Competitive Firm