Exhibit 14-4 The following diagram depicts firms in monopolistically competitive markets. Refer to Exhibit 14-4.If the firm maximizes profit,it will:

Question

Exhibit 14-4 The following diagram depicts firms in monopolistically competitive markets.  Refer to Exhibit 14-4.If the firm maximizes profit,it will:

Quizplus · Accepted Answer

The firm will produce at the output level where marginal revenue (MR) equals marginal cost (MC). In this case, MR=MC at an output level of 7,000 pairs of blue jeans. At this level of output, the firm's price will be higher than its marginal cost, allowing it to earn a positive profit. Producing more than 7,000 pairs would result in a higher marginal cost, reducing the profit.

Exhibit 14-4 the Following Diagram Depicts Firms in Monopolistically Competitive