What price will the monopolistically competitive firm charge in this market?A. $15B. $400C. $500D. $700 The image is a graph depicting economic concepts with the variables price ($) on the vertical axis and quantity on the horizontal axis. Here's a detailed explanation of the components of the graph:### Graph Components:1. **Axes:** - The **vertical axis** represents price levels, marked from 0 to 1000 dollars. - The **horizontal axis** shows the quantity of goods, ranging from 0 to 40 units.2. **Lines and Curves:** - **Demand Curve (D):** A downward-sloping line from left to right, indicating that as price decreases, the quantity demanded increases. - **Marginal Revenue Curve (MR):** Also slopes downward, generally beneath the demand curve, reflecting that the additional revenue gained from selling one more unit decreases as more units are sold. - **Marginal Cost Curve (MC):** It represents the cost of producing one more unit of a good. It initially decreases, hits a low point, and then rises, following the typical U-shape. - **Average Total Cost Curve (ATC):** This U-shaped curve shows the average cost per unit at different production levels, decreasing initially and then rising after a certain level of output.### Key Observations:- The point where the MR curve intersects the MC curve represents the profit-maximizing level of output, where marginal revenue equals marginal cost.- The ATC curve is above the MC curve at lower quantities and rises above it at higher quantities, indicating economies of scale followed by diseconomies of scale.This graph is useful for understanding concepts like pricing, output decisions, and profit maximization in economics.

The equilibrium price condition for a monopolistically competitive firm is: MR=MCIn the given diagram, the quantity is 15 when MC=MR. The price is determined when the perpendicular drawn to the demand curve. Thus, the price is $700., the black dots in the diagram shows the price determination.Answer) D. $700

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Business

Economics

What price will the monopolistically competitive firm charge in this market? A. $15 B. $400 C. $500 D. $700

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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