Figure 11-11

-Refer to Figure 11-11.What is the monopolistic competitor's profit maximizing output?

Question

Figure 11-11
 
-Refer to Figure 11-11.What is the monopolistic competitor's profit maximizing output?

Quizplus · Accepted Answer

At the profit-maximizing output level, the marginal revenue (MR) is equal to the marginal cost (MC). This happens at Q₂ units where MR intersects with MC. At any other output level, the difference between MR and MC will not be zero, which means the firm can increase its profits by either increasing or decreasing output. Therefore, Q₂ units is the monopolistic competitor's profit-maximizing output.

Figure 11-11 -Refer to Figure 11-11.What Is the Monopolistic Competitor's Profit Maximizing