A monopolistic competitor will maximize its profits at the output level at which

Question

Quizplus · Accepted Answer

A monopolistic competitor will maximize its profits where its marginal revenue (MR) equals its marginal cost (MC). This is because MR represents the additional revenue earned from selling one additional unit of output, while MC represents the additional cost incurred in producing one additional unit of output. Therefore, at the output level where MC=MR, the monopolistic competitor is producing the optimal quantity of output where the benefit of producing one more unit (MR) is equal to the cost of producing one more unit (MC).

A Monopolistic Competitor Will Maximize Its Profits at the Output