Question

Imund Morgan: Attempt 1 A monopolistic competitor has the following information about cost and demand. Quantity Price (5) Total Revenue (5) Marginal Revenue (5) Total Cost (5) Marginal Cost (5) Average Cost(5) 15 15 175 7013 13 130 11 180 9 207 3.4 13.8 220 17 225 3.6 11.25 10 5 250 10 30 9 3 290 8 9.67 3359 9.57 385 10 9.63 0 16 10.33 113 What will this firm's profits equal in the short run?

Answer 1

Answer is C.

ie, 0 is the answer

A monopolistic firm will maximise their profit when their average cost is less than price (AC< P). In the above table we can see that AC =P in two places where MR = MC.

Table shows that AC = 10 , P = 10 so they will make normal profit in the short rtun. At that row,  MR and MC are equal ( both are 5)