Use the following for questions 43-51.
Exhibit: Firms in Monopolistic Competition

-(Exhibit: Firms in Monopolistic Competition) Economic profit is earned if the profit-maximizing price is price _______ in Panel _______ .
A) F; (a)
B) G; (a)
C) H; (b)
D) I; (c)

Question

Use the following for questions 43-51.
Exhibit: Firms in Monopolistic Competition
 
-(Exhibit: Firms in Monopolistic Competition) Economic profit is earned if the profit-maximizing price is price _______ in Panel _______ .
A) F; (a) 
B) G; (a) 
C) H; (b) 
D) I; (c)

Quizplus · Accepted Answer

Economic profit is earned when the profit-maximizing price is set at the point where marginal revenue equals marginal cost (MR=MC) and the price is greater than average total cost (ATC). In Panel (a), the point at which MR=MC is at point F, and the corresponding price is above the ATC curve, indicating the firm is earning economic profit.

Use the Following for Questions 43-51