tril (Questions 5-6 refer to the chart below) 5. For this firm operating under m
ID: 1122899 • Letter: T
Question
tril (Questions 5-6 refer to the chart below) 5. For this firm operating under monopolistic competition, which of the following is the profit maximizing output and price? a. X output, A price b. X output, D price c. X output, B price d. Y output, B price e. Z output, D price 6. At the profit-maximizing output, which of the following is correct? a. Economic profits are zero b. Economic profits are the difference between the marginal revenue and the pri C. Marginal revenue = average total cost d. Price= marginal cost e. Both B and D (Questions 7-9 refer to the chart below)Explanation / Answer
Ans:
5) Option B
Output X , D price
6) Option A
Economic profits are zero
A monopolistically competitive firm will maximize its profits by producing output where marginal revenue is equal to marginal cost.If the average total cost is below the market price, then firm will earn an economic profit. In this case average total cost is equal to price and the economic profits will be zero.
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