Figure 10.4 shows the demand, marginal revenue, and cost curves for a monopolistic competitor. If the firm is producing at a profit-maximizing level of output, its total revenue is _____.
Figure 10.4

Question

Figure 10.4 shows the demand, marginal revenue, and cost curves for a monopolistic competitor. If the firm is producing at a profit-maximizing level of output, its total revenue is _____.​ ​
Figure 10.4

Quizplus · Accepted Answer

The profit-maximizing level of output is where marginal revenue equals marginal cost, which occurs at a quantity of 70 units in this case. At this quantity, the price charged is $80, so total revenue is $80 x 70 = $5,600. However, the firm incurs total costs of $900 at this quantity, so its total profit is $4,700 ($5,600 - $900). Therefore, the correct answer is B, $5,700.

Figure 104 Shows the Demand, Marginal Revenue, and Cost Curves for for a Monopolistic