A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20. Price Quantity $30 $26 $22 $18 4 $14 5 $10 6 $6 7 If the firm produces its profit-maximizing level of output and there is a constant marginal cost of $7 per unit, which of the following is incorrect? This firm earns $25 profit at the profit-maximizing level of output. This firm charges a price of $22 to maximize its profit. This firm is in a long-run equilibrium. This firm is not operating at its efficient scale. O O O C
A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20. Price Quantity $30 $26 $22 $18 4 $14 5 $10 6 $6 7 If the firm produces its profit-maximizing level of output and there is a constant marginal cost of $7 per unit, which of the following is incorrect? This firm earns $25 profit at the profit-maximizing level of output. This firm charges a price of $22 to maximize its profit. This firm is in a long-run equilibrium. This firm is not operating at its efficient scale. O O O C
Chapter9: Monopolistic Competition And Oligoply
Section: Chapter Questions
Problem 5SQ
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Transcribed Image Text:A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20.
Price
Quantity
$30
1
$26
$22
$18
4
$14
5
$10
$6
7
If the firm produces its profit-maximizing level of output and there is a constant marginal cost of $7 per unit, which of the following is incorrect?
This firm earns $25 profit at the profit-maximizing level of output.
This firm charges a price of $22 to maximize its profit.
This firm is in a long-run equilibrium.
This firm is not operating at its efficient scale.
3.
O O
O O
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