Figure: Profits in Monopolistic Competition (Figure: Profits in Monopolistic Competition) In panel B of the figure Profits in Monopolistic Competition, the profit-maximizing quantity of output is determined by the intersection at point:

Question

Figure: Profits in Monopolistic Competition   (Figure: Profits in Monopolistic Competition) In panel B of the figure Profits in Monopolistic Competition, the profit-maximizing quantity of output is determined by the intersection at point:

Quizplus · Accepted Answer

The profit-maximizing quantity of output happens where the marginal revenue (MR) equals marginal cost (MC), which is at point K in panel B. At this point, the difference between price and average total cost (ATC) is the greatest, resulting in the highest level of profits.