The profit-maximizing monopolistic competitor produces at the level of output where
A)price equals marginal cost and marginal revenue.
B)marginal cost equals marginal revenue, but not price.
C)price equals marginal revenue, but not marginal cost.
D)price equals marginal cost, but not marginal revenue.

Question

Quizplus · Accepted Answer

A monopolistic competitor maximizes profit where marginal cost equals marginal revenue, but due to product differentiation and market power, price does not equal marginal cost at this point.

The Profit-Maximizing Monopolistic Competitor Produces at the Level of Output