Assume That a Monopolistically Competitive Firm Faces the Following Situation

question 111

Multiple Choice

Assume that a monopolistically competitive firm faces the following situation: P = $16; output = 9,000 units; MC = $11; ATC = $10; AVC = $7; and MR = $14. Which statement is correct regarding profit maximization?

• A) The firm is maximizing profit.
• B) The firm would earn higher profit by increasing output.
• C) The firm is minimizing its losses.
• D) The firm would earn higher profit by decreasing output.

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