Asked by Connie Walwyn on Apr 28, 2024
Verified
To maximize profit, a monopolistically competitive firm will produce where
A) marginal revenue equals price.
B) price equals marginal cost.
C) price equals average total cost.
D) marginal revenue equals marginal cost.
Marginal Revenue
Marginal Revenue refers to the extra revenue that is earned by selling an additional unit of a product or service.
Marginal Cost
The hike in total expenditure linked to the production of one additional good or service unit.
- Uncover and critique the methodologies adopted by businesses to maximize returns in monopolistically competitive markets, considering both the near future and the distant future.
Verified Answer
JB
Jordan BrownApr 28, 2024
Final Answer :
D
Explanation :
In a monopolistically competitive market, firms maximize profit by producing at the level where marginal revenue equals marginal cost. This is the point where the cost of producing one more unit equals the revenue gained from selling that additional unit.
Learning Objectives
- Uncover and critique the methodologies adopted by businesses to maximize returns in monopolistically competitive markets, considering both the near future and the distant future.