Asked by Nneka Onwualu on May 06, 2024
Verified
Refer to Figure 15.2. If We Do Hair is maximizing profit as a monopolistically competitive firm, it is earning a profit of
A) $180.
B) $220.
C) $320.
D) $480.
Monopolistically Competitive
A market structure characterized by many firms selling products that are substitutes but differentiated from one another.
Economic Profit
A firm's total revenues minus its explicit and implicit costs; a measure of performance that includes opportunity costs.
- Develop the skill to assess profit, total sales, and overall costs for corporations engaged in monopolistically competitive marketplaces.
Verified Answer
LM
Laaysia MortimerMay 08, 2024
Final Answer :
C
Explanation :
In a monopolistically competitive market, a firm maximizes profit where marginal revenue equals marginal cost. The profit is calculated as (Price - Average Total Cost) * Quantity. Without the specific details from Figure 15.2, such as the price, quantity, and average total cost at the profit-maximizing output, it's not possible to directly calculate the profit. However, based on the information given that choice C is correct, it implies that at the profit-maximizing quantity, the difference between the price and the average total cost, multiplied by the quantity sold, equals $320.
Learning Objectives
- Develop the skill to assess profit, total sales, and overall costs for corporations engaged in monopolistically competitive marketplaces.