A monopolistic competitor will maximize profits by:

Question

Quizplus · Accepted Answer

A monopolistic competitor will maximize profits by producing at the output level where MR = MC. This is the same profit-maximizing condition as a perfectly competitive firm. However, the monopolistic competitor will not produce at the point where price equals marginal cost, as it is not a price taker and has some market power to set its price above marginal cost. Instead, it will produce at a lower quantity and charge a higher price compared to a perfectly competitive firm.

A Monopolistic Competitor Will Maximize Profits By