A monopolistically competitive firm that is maximizing profit will choose to produce at the level where:

Question

Quizplus · Accepted Answer

A monopolistically competitive firm that is maximizing profit will produce at the level where its marginal revenue equals its marginal cost. This is because producing any additional unit beyond this point would lead to a decline in profit since the cost of producing an additional unit would exceed the revenue generated by that unit. Therefore, choosing the output level where marginal revenue equals marginal cost is the profit-maximizing strategy for a monopolistically competitive firm.

A Monopolistically Competitive Firm That Is Maximizing Profit Will Choose