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Figure: Profit Maximization in Monopolistic Competition
-(Figure: Profit Maximization in Monopolistic Competition) Look at the figure Profit Maximization in Monopolistic Competition. A firm in monopolistic competition will maximize profits by producing so that:
A) P = MC.
B) MR = MC.
C) P = MR.
D) P - ATC (i.e., economic profit per unit) is the largest.

Question

Use the following to answer questions:
Figure: Profit Maximization in Monopolistic Competition 
-(Figure: Profit Maximization in Monopolistic Competition) Look at the figure Profit Maximization in Monopolistic Competition. A firm in monopolistic competition will maximize profits by producing so that:
A) P = MC. 
B) MR = MC. 
C) P = MR. 
D) P - ATC (i.e., economic profit per unit) is the largest.

Quizplus · Accepted Answer

In monopolistic competition, a firm maximizes profit by producing the quantity where marginal revenue (MR) equals marginal cost (MC).

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