FIGURE 10-1

-The profit-maximizing firm illustrated in Figure 10-1 operates in a monopolistically competitive industry. What is this firm's total profit equal to?

Question

FIGURE 10-1
 
-The profit-maximizing firm illustrated in Figure 10-1 operates in a monopolistically competitive industry. What is this firm's total profit equal to?

Quizplus · Accepted Answer

The total profit for a firm in monopolistic competition is the area between the price (demand curve) and the average total cost (ATC) curve, up to the quantity produced. In this case, FGAB represents the area of profit, as it is the difference between the price and ATC at the profit-maximizing quantity.

FIGURE 10-1 -The Profit-Maximizing Firm Illustrated in Figure 10-1 Operates in a 10-1