The figure given below shows the revenue and cost curves of a monopolistically competitive firm.Figure 12.4
MR: Marginal revenue curve
ATC: Average total cost curve
MC: Marginal cost curve
-For years, Intel was able to charge a higher price for microchips because:
A)it had a higher quality product than its rivals.
B)it spent less on advertising than its rivals.
C)consumers knew that Intel had the best employees.
D)Intel relied more on foreign labor.
E)of its successful product differentiation.

Question

The figure given below shows the revenue and cost curves of a monopolistically competitive firm.Figure 12.4
  MR: Marginal revenue curve
ATC: Average total cost curve
MC: Marginal cost curve
-For years, Intel was able to charge a higher price for microchips because:
A)it had a higher quality product than its rivals. 
B)it spent less on advertising than its rivals. 
C)consumers knew that Intel had the best employees. 
D)Intel relied more on foreign labor. 
E)of its successful product differentiation.

Quizplus · Accepted Answer

The revenue curve shows that the firm is able to charge a price higher than average total cost, indicating successful product differentiation. This suggests that consumers value the firm's product above its competitors and are willing to pay a premium for it. Therefore, the best choice is E, as it suggests that Intel's success was due to its ability to differentiate its product from competitors. The other choices do not seem to be supported by the information given in the question.

The Figure Given Below Shows the Revenue and Cost Curves