Use the following to answer questions :
Figure: Firms in Monopolistic Competition
-(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.Zero economic profit will be earned if the profit-maximizing price is _____ in panel _____.

Question

Use the following to answer questions :
Figure: Firms in Monopolistic Competition 
-(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.Zero economic profit will be earned if the profit-maximizing price is _____ in panel _____.

Quizplus · Accepted Answer

Zero economic profit will be earned when price equals average total cost. In panel (b), this occurs at point H, where the demand curve intersects the average total cost curve. Therefore, the profit-maximizing price that results in zero economic profit is H in panel (b).

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