A Monopolistically Competitive Firm Is Currently Producing 25 Units of Output

question 176

Multiple Choice

A monopolistically competitive firm is currently producing 25 units of output. At this level of output the firm is charging the highest price it can at $30, has marginal revenue equal to $21, has marginal cost equal to $21, and has average total cost equal to $22. From this information we can infer that

• A)the firm is currently maximizing its profit.
• B)the firm is earning zero profit.
• C)increasing the quantity produced will raise per-unit costs.
• D)firms are likely to leave this market in the long run.

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