The figure below shows the marginal cost, average total cost, demand, marginal revenue curves for a firm in monopolistic competition. Assume that the cost curves of a perfectly competitive firm are identical to the cost curves of the monopolistically competitive firm shown here. The average revenue for the perfectly competitive firm is $6. Which of the following is true of the monopolistically competitive firm in the short run? Figure 10.1 SEQ Dollors per unit $1 O 10 20 30 O O Marginal Cost Average Total Cost Demand Marginal Revenue 60 70 SO 30 30 Quantity per period (in thousands) a. The firm incurs a loss of $50,000. b. The firm earns a profit of $12,000. c. The firm earns a profit of $45,000. d. The firm incurs a loss of $24,000. 12
The figure below shows the marginal cost, average total cost, demand, marginal revenue curves for a firm in monopolistic competition. Assume that the cost curves of a perfectly competitive firm are identical to the cost curves of the monopolistically competitive firm shown here. The average revenue for the perfectly competitive firm is $6. Which of the following is true of the monopolistically competitive firm in the short run? Figure 10.1 SEQ Dollors per unit $1 O 10 20 30 O O Marginal Cost Average Total Cost Demand Marginal Revenue 60 70 SO 30 30 Quantity per period (in thousands) a. The firm incurs a loss of $50,000. b. The firm earns a profit of $12,000. c. The firm earns a profit of $45,000. d. The firm incurs a loss of $24,000. 12
Chapter1: Making Economics Decisions
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Transcribed Image Text:The figure below shows the marginal cost, average total cost, demand, marginal revenue curves for a firm
in monopolistic competition. Assume that the cost curves of a perfectly competitive firm are identical to
the cost curves of the monopolistically competitive firm shown here. The average revenue for the perfectly
competitive firm is $6. Which of the following is true of the monopolistically competitive firm in the short
run?
Figure 10.1
SEQ
Dollors per unit
$1
O
10
20 30
O O
Marginal Cost Average Total Cost
Demand
Marginal Revenue
60 70
SO
30 30
Quantity per period (in thousands)
a. The firm incurs a loss of $50,000.
b. The firm earns a profit of $12,000.
c. The firm earns a profit of $45,000.
d. The firm incurs a loss of $24,000.
12
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