The diagram below shows selected cost and revenue curves for a firm in a monopolistically competitive industry. FIGURE 11-1
-Refer to Figure 11-1.Assuming this firm is producing its profit-maximizing level of output,what is the per-unit profit being earned by this firm?

Question

The diagram below shows selected cost and revenue curves for a firm in a monopolistically competitive industry.  FIGURE 11-1
-Refer to Figure 11-1.Assuming this firm is producing its profit-maximizing level of output,what is the per-unit profit being earned by this firm?

Quizplus · Accepted Answer

The per-unit profit is calculated by subtracting the average total cost from the price at the profit-maximizing output level. If the figure indicates that the price is $25 and the average total cost is $20, then the per-unit profit is $5.

The Diagram Below Shows Selected Cost and Revenue Curves for a Firm