Figure 16-2 This figure depicts a situation in a monopolistically competitive ma
ID: 1119341 • Letter: F
Question
Figure 16-2 This figure depicts a situation in a monopolistically competitive market. Mc MR Demand 303540453055 6063707580839095100105110ust20 7. Refer to Figure 16-2. What price will the monopolistically competitive firm charge in this market? a. $60 b. $70 c. $75 d. $80 Refer to Figure 16-2. At the profit-maximizing level of output, what is this firm's total cost of production? a. $1,200 b. $1,400 c. $1,600 d. $1,875 9. Refer to Figure 16-2. What is the profit-maximizing price, quantity, and resulting profit? a. P-$60, Q-20 units, profit $200 b. P-$80, Q-20 units, profit-$200 c. P=575, Q=25 units, profit-S100 d, PS60, Q 40 units, profit=SO 10. Refer to Figure 16-2. How much profit will the monopolistically competitive firm ean in this situation? a. $o b. $80 c. $200 d. $400Explanation / Answer
7. In case of monopoly, profit maximising output is produced where MR=MC. The monopolist set the profit maximising price where the profit maximising output falls on the demand curve. So, according to the graph, the monopoly will charge $80 (this is the point where the profit maximising output lies on the demand curve).
Answer- option(d)
8. The profit maximising output lies on the ATC curve where ATC=$70 and profit maximising quantity is 20 units.
So, the total cost of production at profit maximising output level is, TC = ATC x Q = $(70*20) = $1400
Answer- option(b).
9. Profit maximizing quantity is 20 units , price is $80.
Therefore, total revenue at the profit maximising point is $(80*20) = $1600 and we found that TC at this point is $1400.
So, profit at this Profit maximising point is,
TR - TC = $(1600 - 1400) = $200
Answer - option (b)
10. In this situation the monopolistically competitive firm will earn a profit of $200 (as we calculated before)
Answer- option (c)
11. Profit maximizing output (output produced where MR=MC) is 20 units .
Answer- option (a)
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