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 the short run,a firm in monopolistic competition may earn economic profits.The profits in panel (A)of the figure are:
A)P - S.
B)(P -
S)× M.
C)(P -
S)× Q.
D)(P -
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 the short run,a firm in monopolistic competition may earn economic profits.The profits in panel (A)of the figure are:
A)P - S. 
B)(P - 
S)× M. 
C)(P - 
S)× Q. 
D)(P - 
T)× Q.

Quizplus · Accepted Answer

The profits in panel (A) are represented by the area (P - S)× Q, where P is the price per unit, S is the average total cost per unit at quantity Q, and Q is the quantity of goods sold. This area represents the economic profit earned by the firm in the short run.

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