38 Refer to Figure#5. Thi figure depicts a situation in a monopolistically compe

Question

38 Refer to Figure#5. Thi figure depicts a situation in a monopolistically competitive market. How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price? a. $200.00. b. $312.50., c.$400.00. d. $800.00 39 Refer to Figure#5. This figure depicts a situation in a monopolistically competitive market. How moch profit will the monopolistically competitive firm earn in this situation? a. A $10 profit. d. No profit, since monopolistically competitive firms never earn economic profit b. A $20 profit. c. A $200 profit. Figure# 5:

Explanation / Answer

Q38
Consumer surplus is the area above price and below demand curve
the monopolistic frim produces at MR=MC
where
Q=20
P=80
CS=0.5*(100-80)*20=$200
option a

Q39
Profit=(P-ATC)*Q
=(80-70)*20=$200
option c

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