Suppose that a firm in a monopolistically competitive market is operating at its profit-maximizing point in the long run. The firm has a total revenue of $800, its marginal revenue is $10, and it sells 50 units of output. Given this, we can conclude that the price of the good is _____ and the marginal cost of production is:

Question

Quizplus · Accepted Answer

In monopolistic competition, in the long run, firms operate where price equals average total cost and marginal cost equals marginal revenue. Given total revenue of $800 and 50 units sold, the price is $16 ($800/50). Since marginal revenue is $10, marginal cost is also $10.

Suppose That a Firm in a Monopolistically Competitive Market Is