The graphs below shows a firm operating in monopolistic competiton market structure.105100MC9590 +ATC85807570656055+50 +45 +40 +35 +30 +25 +2015 +10+MR+++++++++YT+++)Demand5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100105110115120 Qi.Determine the profit maximizing price and quantity at equilibrium.ii. Calculate the Total Revenue, Total Cost and profit.iii.Firms in this market structure usually practise product differentiation. Why?

Under monopolistic competition, profit is maximized at MR = MC

Answered: The graphs below shows a firm operating…

The graphs below shows a firm operating in monopolistic competiton market structure. 105 100 MC 95 90 ATC 85 80 75 70 65 60 55 50 45

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Monopolistic Competition

Section: Chapter Questions

Problem 4QCMC

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Question

The graphs below shows a firm operating in monopolistic competiton market structure.
105
100
MC
95
90 +
ATC
85
80
75
70
65
60
55+
50 +
45 +
40 +
35 +
30 +
25 +
20
15 +
10+
MR
+++++++++YT+++)
Demand
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100105110115120 Q
i.
Determine the profit maximizing price and quantity at equilibrium.
ii. Calculate the Total Revenue, Total Cost and profit.
iii.
Firms in this market structure usually practise product differentiation. Why?

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