The accompanying graph depicts average total cost (ATC),marginal cost (MC), marginal revenue (M), and demand(D) facing a monopolistically competitive firm.50MC45Place point A at the firm's profit maximizing price and40quantity.35What is the firm's total cost?ATC3025total cost: \$2015What is the firm's total revenue?10total revenue: \$MR0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100QuantityWhat is the firm's total profit?profit: \$Price and Cost (S)

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Step 1

A monopolistic competitive firm maximises its profits, he will produce at a price where Marginal revenue (MR) = Marginal Cost (MC) and the perpendicular line that touches the demand curve above that is at price \$30 at which the output sold is 50 units. Point A is placed can be seen in the graph below:

Step 2

The total cost can be obtained by multiplying ATC with the quantity produced at this price that is 50 units as we know, ATC = TC/Q

TC=ATC * Q = 25*50 = \$1250

Step 3

Total Revenue is equal to the price multiplied with quanti...

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