Table 16-3
This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm.

-Refer to Table 16-3.What price will this firm charge to maximize profit?

Question

Table 16-3
This table shows the demand schedule,marginal cost,and average total cost for a monopolistically competitive firm.
 
-Refer to Table 16-3.What price will this firm charge to maximize profit?

Quizplus · Accepted Answer

To maximize profit, a firm in a monopolistically competitive market should produce where marginal revenue (MR) equals marginal cost (MC). In this case, at a price of $8, the firm would sell 19 units, and the marginal revenue for the 19th unit is $8. The marginal cost for the 19th unit is also $8, indicating that this is the quantity at which the firm would maximize profit. Therefore, the firm would charge a price of $8 to maximize profit.

Table 16-3 This Table Shows the Demand Schedule,marginal Cost,and Average Total Cost