The profit-maximizing monopolistic competitive firm produces the level of output at which
A)price equals marginal cost.
B)marginal revenue equals marginal cost.
C)there is resource allocative efficiency.
D)average total cost is at a minimum.

Question

Quizplus · Accepted Answer

A monopolistic competitive firm maximizes profit where marginal revenue equals marginal cost, similar to firms in other market structures. This is because at this point, the cost of producing one more unit equals the revenue gained from selling that unit, optimizing profit.

The Profit-Maximizing Monopolistic Competitive Firm Produces the Level of Output