Table 10.1
$$\begin{array} { c c c }
\mathrm { Q } & \mathrm { P } ( \$ ) & \mathrm { TC } ( \$ ) \
\hline 1 & 27 & 10 \
2 & 24 & 17 \
3 & 21 & 32 \
4 & 18 & 47 \
5 & 15 & 67
\end{array}$$
-Refer to Table 10.1,which shows the output,price,and total cost for a monopolistic competitor.The profit-maximizing output for the monopolistic competitor is _____

Question

Table 10.1
 $$\begin{array} { c c c } 
\mathrm { Q } & \mathrm { P } ( \$ ) & \mathrm { TC } ( \$ ) \
\hline 1 & 27 & 10 \
2 & 24 & 17 \
3 & 21 & 32 \
4 & 18 & 47 \
5 & 15 & 67
\end{array}$$
-Refer to Table 10.1,which shows the output,price,and total cost for a monopolistic competitor.The profit-maximizing output for the monopolistic competitor is _____

Quizplus · Accepted Answer

To find the profit-maximizing output for a monopolistic competitor, we need to identify the output level where marginal revenue (MR) equals marginal cost (MC). Since the table does not provide MR or MC directly, we approximate by looking for where the additional revenue from selling one more unit (the price of the next unit) is closest to the additional cost of producing one more unit (the change in total cost, or TC, from producing one more unit).- From 1 to 2 units: The price decreases from $27 to $24, suggesting a revenue increase of $24 for the second unit. The total cost increases from $10 to $17, suggesting a marginal cost of $7 for the second unit.- From 2 to 3 units: The price decreases to $21, suggesting a revenue increase of $21 for the third unit. The total cost increases from $17 to $32, suggesting a marginal cost of $15 for the third unit.- From 3 to 4 units: The price decreases to $18, suggesting a revenue increase of $18 for the fourth unit. The total cost increases from $32 to $47, suggesting a marginal cost of $15 for the fourth unit.- From 4 to 5 units: The price decreases to $15, suggesting a revenue increase of $15 for the fifth unit. The total cost increases from $47 to $67, suggesting a marginal cost of $20 for the fifth unit.The profit-maximizing output is where the price (as a proxy for MR since exact MR is not provided) is closest to or just above the MC before it exceeds MC. In this case, up to 3 units, the price each unit can be sold at is above the marginal cost of producing each additional unit. Beyond 3 units, the price falls below the marginal cost, indicating that producing more than 3 units would not maximize profit. Therefore, the profit-maximizing output is 3 units.

Table 101 -Refer to Table 10