Exhibit 9-A
The following diagram depicts monopolistically competitive firms.
-Refer to Exhibit 9-A.In Graph B above, the firm will maximize profits (minimize losses) by producing at level of output ____ and charging price ____.

Question

Exhibit 9-A
The following diagram depicts monopolistically competitive firms. 
-Refer to Exhibit 9-A.In Graph B above, the firm will maximize profits (minimize losses) by producing at level of output ____ and charging price ____.

Quizplus · Accepted Answer

In Graph B, the firm will maximize profits by producing at output level q1 and charging price P1. This is because at this point, the firm's marginal revenue (MR) curve intersects its marginal cost (MC) curve. At this point, the firm is producing the quantity of output that maximizes the difference between its total revenue and total cost.

Exhibit 9-A The Following Diagram Depicts Monopolistically Competitive Firms