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Figure: Profit Maximization in Monopolistic Competition
-(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.In panel (A)of the figure,the profit-maximizing price and quantity are _____ and _____.
A)S;M
B)P;M
C)P;Q
D)T;Q

Question

Use the following to answer question:
Figure: Profit Maximization in Monopolistic Competition 
-(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.In panel (A)of the figure,the profit-maximizing price and quantity are _____ and _____.
A)S;M 
B)P;M 
C)P;Q 
D)T;Q

Quizplus · Accepted Answer

In panel (A) of a typical profit maximization graph for monopolistic competition, the profit-maximizing quantity is where the marginal cost (MC) curve intersects the marginal revenue (MR) curve, which is at point Q. The profit-maximizing price is then determined by going up to the demand curve from this quantity, which is at point P.

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