Question

a monopolistically competitive firm is produces 20 units. the firm is charging the highest price it can at $20, has marginal revenue equal to $12, has marginal cost equal to $12, and has average total cost equal to $18. what can we conclude? a. the firm is earning zero profit. b. firms are likely to leave this market in the long run. c. the firm is currently maximizing its profit. d. the profits of the firm are negative.

Answer 1

In a market with monopolistic competition, there are numerous product variants and sellers rely on advertisements. Sellers are price makers and have market power, but not to the same extent as a monopoly.

C. the firm is right now amplifying its benefit.

Because the marginal revenue and the marginal... are equal, the company is currently maximizing profit.

Examples of monopolistic competition are provided.

Companies with similar but not identical product offerings can compete in monopolistic competition, which combines aspects of monopoly and perfect competition. Examples of industries with monopolistic competition include clothing, restaurants, hair salons, household goods, and restaurants.

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