Figure 16-6
-Refer to Figure 16-6. Which of the graphs shown would be consistent with a profit maximizing firm in a monopolistically competitive market that is earning a positive profit?
A)panel a
B)panel b
C)panel c
D)panel d

Question

Figure 16-6 
-Refer to Figure 16-6. Which of the graphs shown would be consistent with a profit maximizing firm in a monopolistically competitive market that is earning a positive profit?
A)panel a 
B)panel b 
C)panel c 
D)panel d

Quizplus · Accepted Answer

A monopolistically competitive firm that is earning a positive profit will produce at the point where marginal cost (MC) equals marginal revenue (MR) and will charge a price (P) that is greater than marginal cost. In the graph, this point is represented by the intersection of the MC and MR curves at point E. The firm will produce output Qe and charge price Pe. Panel C shows this situation.

Figure 16-6 -Refer to Figure 16-6. Which of the Graphs Shown Would