Question

Indicate the correct answer and why it's right. Label the graph as instructed. Thank you!

The graph shows the cost curves, demand curve, and marginal revenue curve of a firm in monopolistic competition Draw a point to indicate the firm's profit-maximizing output and price. Draw a shape that shows the firm's economic proft or loss. Label it appropriately. Price and cost (dollars per printer) 100 In the short run, a firm in monopolistic compettion O A. incurs an economic loss O B. breaks even O C. always makes an economic profrt OD makes its output and price decision just like a monopoly firm does 60- MR 100 150 200 250300 Quantity (printers per week) >>>Draw only the objects specified in the question.

Answer 1

Profit maximization occurs at the intersection occurs where MC = MR and extended to demand curve. In the above graph, profit maximization occurs when p = $70 per printer and quantity is 150 printers per week Economic profit is (P - ATC) times Q In the short run, a firm in monopolistic competition (D) makes its output and price decision just like a monopolist (MC = MR)