-Kevin owns a personal training gymnasium in Orlando.The above figure shows the demand and cost curves for his firm,which competes in a monopolistically competitive market.If Kevin trains 5 clients per day,he will ________ his profit and will ________.

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, firms maximize profit where marginal cost equals marginal revenue. If Kevin is not at this point with 5 clients, he is not maximizing profit but can still make an economic profit if price exceeds average total cost.

-Kevin Owns a Personal Training Gymnasium in Orlando