The figure given below shows the revenue and cost curves of a monopolistically competitive firm. Figure 25.3 In the figure,
D: Demand curve
MR: Marginal revenue curve
MC: Marginal cost curve
ATC: Average total cost curve
The profit per unit of output for the firm in the Figure 25.3 is:

Question

The figure given below shows the revenue and cost curves of a monopolistically competitive firm. Figure 25.3  In the figure,
D: Demand curve
MR: Marginal revenue curve
MC: Marginal cost curve
ATC: Average total cost curve
The profit per unit of output for the firm in the Figure 25.3 is:

Quizplus · Accepted Answer

Profit per unit of output = price - average total cost
At the profit maximizing level of output, the firm produces where MR = MC. 
In the figure, this occurs at point A, where the MR curve intersects the MC curve. 
The corresponding price is PS1U1B16S1U1B0 and the average total cost is PS1U1B12.S1U1B0. 
Therefore, the profit per unit of output is PS1U1B16S1U1B0 - PS1U1B12.S1U1B0, which is equal to PS1U1B4S1U1B0. 
Thus, the correct answer is D.

The Figure Given Below Shows the Revenue and Cost Curves