Question
Asked Dec 12, 2019
1 views
fullscreen
check_circle

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.

help_outline

Image Transcriptionclose

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

fullscreen
Step 3

The total profit made by the firm c...

help_outline

Image Transcriptionclose

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

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Economics

Related Economics Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: The accompanying diagram depicts a monopolist whose price is regulated at $10 per unit. Use this fig...

A: Hi, thank you for the question. As per our Honor Code, we can attempt only first three parts of the ...

question_answer

Q: There is a bar on Off‐Main Street called the Rock‐n‐Roll Bar. All the people that go to that bar lik...

A: With the existence of a transaction cost of $90 which has to be split between the two that is $45 ea...

question_answer

Q: Capital flight is the sudden large drop in demand for domestic assets. Explain the following: if we ...

A: Capital flight is the flow of domestic financial resources to foreign countries. The capital flight ...

question_answer

Q: There are N women that all share the same toilet every day in an office building. Each sits on the t...

A: a.The simultaneous game is one game in which the action of one player will be determined without the...

question_answer

Q: If a risk‐averse individual owns a home worth $100,000, and that individual is willing to pay a maxi...

A: Click to see the answer

question_answer

Q: Trace the impact of a sale of government bonds by the Central bank on bond prices, interest rates, i...

A: Real GDP: It refers to the measurement of the total value of all goods and services produced measure...

question_answer

Q: What is a probit model vrs. a logit model?

A: Probit and Logit model are used when we need to predict or analyze the binary dependent variable.In ...

question_answer

Q: The production function for a product is given by q= 10K^(1/2)L^(1/2) where K is capital, and L is l...

A: The production is given as follows-

question_answer

Q: Nominal GDP in year 5 is:

A: Nominal GDP is the market value of all final goods and services produced by a nation at the current ...