To Maximize Its Profit,a Monopolistically Competitive Firm Produces the Output

question 10

Multiple Choice

To maximize its profit,a monopolistically competitive firm produces the output level at which ____.

• A) its price elasticity of demand equals one
• B) MR = MC
• C) ATC is minimized
• D) MR = AVC

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Definitions:

Profit

The financial gain obtained when the amount earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Industry Supply

The total output of goods or services that firms in a specific industry are willing and able to sell at various prices, over a certain period.

Industry Demand

The total demand for all the products or services produced by a particular industry.

Positive Profits

Earnings that occur when a company's total revenues exceed its total costs, indicating financial gain from its operations.