Use the following to answer question:
-Table: Spring Water.The table shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs.If the industry were in perfect competition,the profit-maximizing output would be _____ cases.
A)6
B)5
C)7

Question

Use the following to answer question: 
-Table: Spring Water.The table shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs.If the industry were in perfect competition,the profit-maximizing output would be _____ cases.
A)6 
B)5 
C)7

Quizplus · Accepted Answer

In perfect competition, firms produce where price equals marginal cost (P=MC). Assuming the table shows that at 7 cases, P=MC, the profit-maximizing output would be 7 cases.

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