The figure below depicts a monopolistically competitive firm in the short run.

-Refer to the figure above.At the profit-maximizing level of output,the monopolistically competitive firm earns profits equal to ________ in the short run.

Question

The figure below depicts a monopolistically competitive firm in the short run.
 
-Refer to the figure above.At the profit-maximizing level of output,the monopolistically competitive firm earns profits equal to ________ in the short run.

Quizplus · Accepted Answer

In the short run, a monopolistically competitive firm maximizes profit where marginal cost equals marginal revenue. The profit is the difference between total revenue and total cost. Graphically, this is represented by the area above the average total cost curve and below the demand curve, up to the profit-maximizing quantity. Since the question does not provide a specific figure, the general interpretation is that Area B, typically between the price (on the demand curve) and the average total cost curve at the profit-maximizing output, represents the profit area.

The Figure Below Depicts a Monopolistically Competitive Firm in the Short