Figure 9-A
The following diagram depicts firms in monopolistically competitive markets.
-Refer to Figure 9-A.If the firm maximizes profit, it will:

Question

Figure 9-A
The following diagram depicts firms in monopolistically competitive markets. 
-Refer to Figure 9-A.If the firm maximizes profit, it will:

Quizplus · Accepted Answer

The profit maximizing level of output for a firm in a monopolistically competitive market is where marginal revenue equals marginal cost. In Figure 9-A, this occurs at a quantity of 7,000 pairs of blue jeans per month. At this level of output, the firm's average total cost curve intersects the demand curve, and the firm earns a positive economic profit. Therefore, the best choice is to produce 7,000 pairs of blue jeans each month.

Figure 9-A The Following Diagram Depicts Firms in Monopolistically Competitive Markets