Figure 16-10
The figure is drawn for a monopolistically-competitive firm.
-Refer to Figure 16-10. At what quantity of output does average revenue exceed marginal revenue by $66.66?
A)at 100 units of output
B)somewhere between 100 and 133.33 units of output
C)at 133.33 units of output
D)at 154.92 units of output

Question

Figure 16-10
The figure is drawn for a monopolistically-competitive firm. 
-Refer to Figure 16-10. At what quantity of output does average revenue exceed marginal revenue by $66.66?
A)at 100 units of output 
B)somewhere between 100 and 133.33 units of output 
C)at 133.33 units of output 
D)at 154.92 units of output

Quizplus · Accepted Answer

At the quantity of output where marginal revenue intersects with marginal cost, draw a horizontal line to the vertical axis. This point represents the price charged by the firm. Average revenue can be seen on the same vertical axis. We can see that at 133.33 units of output, average revenue exceeds marginal revenue by approximately $66.66, so the answer is C.

Figure 16-10 The Figure Is Drawn for a Monopolistically-Competitive Firm