Exhibit 10.5

-Exhibit 10.5 shows the demand,marginal revenue,and cost curves for a monopolistically competitive firm.The profit-maximizing (or loss-minimizing)price for the firm is _____

Question

Exhibit 10.5
 
-Exhibit 10.5 shows the demand,marginal revenue,and cost curves for a monopolistically competitive firm.The profit-maximizing (or loss-minimizing)price for the firm is _____

Quizplus · Accepted Answer

The profit-maximizing quantity is where marginal revenue equals marginal cost, which occurs at a quantity of 6 in this exhibit. At that quantity, the demand curve intersects with the marginal cost curve at a price of $3.25, which is the profit-maximizing (or loss-minimizing) price for the firm. Therefore, the answer is (B) $3.25.

Exhibit 10.5 -Exhibit 10.5 Shows the Demand,marginal Revenue,and Cost Curves for a Cost