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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Asked Dec 12, 2019
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The accompanying graph depicts average total cost (ATC),
marginal cost (MC), marginal revenue (M), and demand
(D) facing a monopolistically competitive firm.
50
MC
45
Place point A at the firm's profit maximizing price and
40
quantity.
35
What is the firm's total cost?
ATC
30
25
total cost: $
20
15
What is the firm's total revenue?
10
total revenue: $
MR
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100
Quantity
What is the firm's total profit?
profit: $
Price and Cost (S)
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The accompanying graph depicts average total cost (ATC), marginal cost (MC), marginal revenue (M), and demand (D) facing a monopolistically competitive firm. 50 MC 45 Place point A at the firm's profit maximizing price and 40 quantity. 35 What is the firm's total cost? ATC 30 25 total cost: $ 20 15 What is the firm's total revenue? 10 total revenue: $ MR 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100 Quantity What is the firm's total profit? profit: $ Price and Cost (S)

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Expert Answer

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:

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50 MC 45 40 35 ATC 25 20 D 15 10 MR 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100 Quantity 30 LO Price and Cost (S)

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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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