Use the following to answer question:
Figure: Firms in Monopolistic Competition
-(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.In panel (A)of the figure,economic profit per unit is the vertical distance between points:
A)K and L.
B)L and O.
C)M and N.
D)N and O.

Question

Use the following to answer question:
Figure: Firms in Monopolistic Competition 
-(Figure: Firms in Monopolistic Competition)Use Figure: Firms in Monopolistic Competition.In panel (A)of the figure,economic profit per unit is the vertical distance between points:
A)K and L. 
B)L and O. 
C)M and N. 
D)N and O.

Quizplus · Accepted Answer

Economic profit per unit is represented by the vertical distance between average total cost (ATC) and the demand curve (AR) at the profit-maximizing output. In panel (A), this occurs at point L and the economic profit per unit is the vertical distance between L and the intersection of ATC and AR at point O. Therefore, the correct answer is B, which represents the vertical distance between points L and O.

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