To maximize its profit,a monopolistically competitive firm chooses its level of output by looking for the

Question

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In a monopolistically competitive market, a firm maximizes its profit by producing where marginal revenue equals marginal cost. At this level of output, the firm is able to charge a price that is higher than its marginal cost, resulting in a profit. If the firm were to produce at a level where marginal revenue is less than marginal cost, it would be better off reducing production. Similarly, if the firm were to produce at a level where marginal revenue is greater than marginal cost, it would be better off increasing production. Therefore, the best choice for a monopolistically competitive firm is to produce where marginal revenue equals marginal cost.

To Maximize Its Profit,a Monopolistically Competitive Firm Chooses Its Level