Asked by Silvia Gopalakrishnan on May 12, 2024
Verified
Refer to Figure 15.2. If We Do Hair maximizes profits as a monopolistically competitive firm, it ________ of $320.
A) is suffering a loss of
B) receives a total revenue
C) is earning a profit
D) has a total cost
Monopolistically Competitive
Describes a market structure where many firms sell products that are similar but not identical, allowing for significant differentiation and some degree of market power.
Total Revenue
The total amount of money received by a firm from sales of its products or services.
Total Cost
Total cost is the complete cost of production, including both fixed and variable costs incurred in the production of goods or services.
- Evaluate the profitability, financial drawbacks, and break-even analysis for firms in a market with monopolistic competition.
- Pinpoint the output levels and prices that lead to maximum profits for organizations in a monopolistically competitive setting.
Verified Answer
SE
Stephanie EugeneMay 13, 2024
Final Answer :
C
Explanation :
In a monopolistically competitive market, if a firm is maximizing profits, it means it is operating where marginal revenue equals marginal cost, and the price is above average total cost. This scenario implies the firm is earning a profit.
Learning Objectives
- Evaluate the profitability, financial drawbacks, and break-even analysis for firms in a market with monopolistic competition.
- Pinpoint the output levels and prices that lead to maximum profits for organizations in a monopolistically competitive setting.