A monopolistically competitive firm has the following cost structure: The firm faces the following demand curve:
To maximize profit (or minimize losses), the firm will produce

Question

A monopolistically competitive firm has the following cost structure:  The firm faces the following demand curve:
 To maximize profit (or minimize losses), the firm will produce

Quizplus · Accepted Answer

To maximize profit or minimize losses, the firm should produce where marginal revenue (MR) equals marginal cost (MC). In this case, the profit-maximizing output level occurs at 30 units of output where MR=MC. At this output level, the firm's total revenue will be $3,000 and total cost will be $2,160 resulting in a profit of $840. Producing any other output level would result in lower profit or higher losses for the firm.

A Monopolistically Competitive Firm Has the Following Cost Structure