Asked Dec 12, 2019

Expert Answer

Step 1

Monopolistic competition refers to a market structure in which many sellers sell differentiated products and there is no barrier to entry. The profit-maximizing price and quantity of a monopolistically competitive firm determined at the intersection point of marginal revenue and marginal cost.

Step 2

In figure 1, point A shows the profit-maximizing price and quantity combination of the monopolistically competitive firm. At this point, the profit-maximizing price is $11 and the profit-maximizing quantity is 7 units.


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20 10 19.00 18 17 MC Profit 10 15 14 Ате 13 A 12 11 10 17:8mand MR 012 3 4 5 678 9 10 11 12 13 14 15 16 17 18 19 20 Quantity Figure 1 Price

Step 3

The total profit made by the firm c...


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Profit = Total Revenue-Total Cost = (7x11)-(7x8) = 77-56 = 21


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