Exhibit 9-A
The following diagram depicts monopolistically competitive firms.
-Refer to Exhibit 9-A.In Graph B, a profit-maximizing (loss-minimizing) firm will experience a ____ at output quantity ____.

Question

Exhibit 9-A
The following diagram depicts monopolistically competitive firms. 
-Refer to Exhibit 9-A.In Graph B, a profit-maximizing (loss-minimizing) firm will experience a ____ at output quantity ____.

Quizplus · Accepted Answer

In Graph B, at output quantity q₁, the firm is producing where the marginal cost curve (MC) intersects the demand curve (D). However, at this level of output, the average total cost (ATC) curve is above the price (P), indicating that the firm is experiencing a loss. Therefore, a profit-maximizing (loss-minimizing) firm will experience a loss at output quantity q₁.

Exhibit 9-A The Following Diagram Depicts Monopolistically Competitive Firms