Refer to the above graph of the representative firm in monopolistic competition.Point c is the intersection of the:
A) marginal cost and marginal revenue curves.
B) marginal cost and average total cost curves.
C) marginal cost and demand curves.
D) average total cost and demand curves.

Question

Refer to the above graph of the representative firm in monopolistic competition.Point c is the intersection of the:
A) marginal cost and marginal revenue curves. 
B) marginal cost and average total cost curves. 
C) marginal cost and demand curves. 
D) average total cost and demand curves.

Quizplus · Accepted Answer

Point c is where the marginal cost curve intersects with the demand curve, indicating the profit-maximizing output level for the firm. The intersection of the marginal cost and marginal revenue curves would determine the profit-maximizing output level for a firm in perfect competition, not monopolistic competition. The intersection of the marginal cost and average total cost curves would determine the level of output where the firm is minimizing its average total cost. The intersection of the average total cost and demand curves would determine the price the firm charges for its product.

Refer to the Above Graph of the Representative Firm in Monopolistic