(Figure: Monopolistic Competition III) The figure Monopolistic Competition III shows the demand, marginal revenue, marginal cost, and average total cost curves for Pat's Pizza Parlor, a monopolistic competitor in the food-to-go industry.When Pat's Pizza Parlor maximizes profit, profit will be:
A)$0.
B)$350.
C)$700.
D)$900.

Question

Quizplus · Accepted Answer

When Pat's Pizza Parlor maximizes profit, it produces where marginal revenue equals marginal cost. The profit is the difference between total revenue and total cost, which can be calculated as (Price - Average Total Cost) x Quantity. Based on the given options, $350 is the correct profit amount.

(Figure: Monopolistic Competition III) the Figure Monopolistic Competition III Shows