Use the following to answer questions:
-(Table: Spring Water) The table Spring Water shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs. At the profit-maximizing output, profit per unit is:
A) $1.17.
B) $8.83.
C) $10.00.
D) $11.75.

Question

Use the following to answer questions: 
-(Table: Spring Water) The table Spring Water shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs. At the profit-maximizing output, profit per unit is:
A) $1.17. 
B) $8.83. 
C) $10.00. 
D) $11.75.

Quizplus · Accepted Answer

In monopolistic competition, the profit-maximizing output is where marginal cost equals marginal revenue. Profit per unit is calculated as the difference between price and average total cost at this output level. Given the choices, $1.17 is the most plausible profit per unit.

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