Table 10.3 Table 10.3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 10.3.The profit-maximising/loss-minimising output level and price are
A)Q = 0 (firm should not produce)
B)Q = 3; P = $18
C)Q = 4; P = $17
D)Q = 5; P = $16

Question

Table 10.3  Table 10.3 shows the demand and cost schedules for a monopolistically competitive firm.
-Refer to Table 10.3.The profit-maximising/loss-minimising output level and price are
A)Q = 0 (firm should not produce) 
B)Q = 3; P = $18 
C)Q = 4; P = $17 
D)Q = 5; P = $16

Quizplus · Accepted Answer

To find the profit-maximizing/loss-minimizing output level and price, we need to compare the marginal revenue and marginal cost. We can see from the table that at Q = 4, MR = $17 and MC = $17. Therefore, the firm should produce 4 units. At this level of output, the price would be $17, which is where the demand and marginal revenue curves intersect. This level of output and price would result in a total profit of $16, which is the highest profit level possible for this firm. Therefore, the best choice is C) Q = 4; P = $17.

Table 103 Table 10