Question 10 8.5 5 Long-run average cost Long-run marginal cost Marginal revenue for firm 3 250 300 Figure 112 Figure 11.2 shows demand and costs for a monopolistically competitive firm. At the profit maximizing output level A. the firm is earning a positive economic profit and more firms are expected to enter the market. B. the firm is earning a zero economic profit and no firms are expected to enter the market. OC. the firm is earning a negative economic profit and more firms are expected to leave the market. OD. There is not sufficient information.

CHT5AF The Asker · Economics

Transcribed Image Text: 10 8.5 5 Long-run average cost Long-run marginal cost Marginal revenue for firm 3 250 300 Figure 112 Figure 11.2 shows demand and costs for a monopolistically competitive firm. At the profit maximizing output level A. the firm is earning a positive economic profit and more firms are expected to enter the market. B. the firm is earning a zero economic profit and no firms are expected to enter the market. OC. the firm is earning a negative economic profit and more firms are expected to leave the market. OD. There is not sufficient information.
More
Transcribed Image Text: 10 8.5 5 Long-run average cost Long-run marginal cost Marginal revenue for firm 3 250 300 Figure 112 Figure 11.2 shows demand and costs for a monopolistically competitive firm. At the profit maximizing output level A. the firm is earning a positive economic profit and more firms are expected to enter the market. B. the firm is earning a zero economic profit and no firms are expected to enter the market. OC. the firm is earning a negative economic profit and more firms are expected to leave the market. OD. There is not sufficient information.
Community Answer
B0FXJQ

A. this firm is earning a positive economic profit and more firms are expected to enter the market.  Profit is maximized when the marginal cost is equal to the marginal revenue. This happens at the quantity 250. Price charged in the market is given by the demand curve. At quantity 250, market price is 10. So, Profit maximizing quantity (Q*) is ... See the full answer