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-(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. If the industry were in perfect competition, the profit-maximizing output would be _____ cases.
A) 6
B) 5
C) 7
D) 8

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. If the industry were in perfect competition, the profit-maximizing output would be _____ cases.
A) 6 
B) 5 
C) 7 
D) 8

Quizplus · Accepted Answer

In perfect competition, firms produce where price equals marginal cost (P=MC). Assuming the table shows that this condition is met at 7 cases, the profit-maximizing output would be 7 cases.

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