A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20. Price Quantity $30 $26 $22 $18 4 $14 5 $10 6 $6 7 If the firm produces its profit-maximizing level of output and there is a constant marginal cost of $7 per unit, which of the following is incorrect? This firm earns $25 profit at the profit-maximizing level of output. This firm charges a price of $22 to maximize its profit. This firm is in a long-run equilibrium. This firm is not operating at its efficient scale. O O O C

A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20. Price Quantity $30 $26 $22 $18 4 $14 5 $10 6 $6 7 If the firm produces its profit-maximizing level of output and there is a constant marginal cost of $7 per unit, which of the following is incorrect? This firm earns $25 profit at the profit-maximizing level of output. This firm charges a price of $22 to maximize its profit. This firm is in a long-run equilibrium. This firm is not operating at its efficient scale. O O O C

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A monopolistic firm operates in two separate markets, Market A and Market B. The firm can sell its product at different prices in each market due to different demand conditions. In Market A, the firm faces a demand curve given by Q_A = 100 - P_A, where Q_A is the quantity demanded in Market A and P_A is the price charged in Market A. In Market B, the demand curve is Q_B = 80 - 2P_B, where Q_B is the quantity demanded in Market B and P_B is the price charged in Market B. The firm has a total production capacity of 120 units. What price should the firm charge in each market to maximize its total revenue?
First tab options- P>ATC, MR>MC, P=ATC, MR=MC Second tab options- equal to, greater than, less than Last tab options- business-stealing, product variety
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