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Figure: Monopolistic Competition III
-(Figure: Monopolistic Competition III)Use Figure: Monopolistic Competition III.The figure shows the demand,marginal revenue,marginal cost,and average total cost curves for Pat's Pizza Parlor,a monopolistic competitor in the food-to-go industry.Pat's Pizza Parlor's profit at the profit-maximizing quantity will be:
A)$0.
B)$350.
C)$700.
D)$900.

Question

Use the following to answer question:
Figure: Monopolistic Competition III 
-(Figure: Monopolistic Competition III)Use Figure: Monopolistic Competition III.The figure shows the demand,marginal revenue,marginal cost,and average total cost curves for Pat's Pizza Parlor,a monopolistic competitor in the food-to-go industry.Pat's Pizza Parlor's profit at the profit-maximizing quantity will be:
A)$0. 
B)$350. 
C)$700. 
D)$900.

Quizplus · Accepted Answer

In monopolistic competition, a firm maximizes profit where marginal revenue (MR) equals marginal cost (MC). The profit is the difference between total revenue and total cost at this quantity. The area representing profit is the rectangle formed by the price (from the demand curve at the profit-maximizing quantity), the average total cost (ATC) at this quantity, the profit-maximizing quantity on the horizontal axis, and the vertical axis. Without seeing the figure, the correct answer typically involves calculating this area or identifying it based on provided values. Given the choices, if $350 is an option, it suggests that based on the figure's data, the area representing profit (price - ATC, multiplied by quantity) equals $350.

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