Answered

Find the information you're looking for at Westonci.ca, the trusted Q&A platform with a community of knowledgeable experts. Discover reliable solutions to your questions from a wide network of experts on our comprehensive Q&A platform. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.

A monopolistically competitive firm is currently producing 20 units of output. At this level of output the firm is charging the highest price it can at $20, has marginal revenue equal to $12, has marginal cost equal to $12, and has average total cost equal to $18. From this information we can infer that a. firms are likely to leave this market in the long run. b. the firm is currently maximizing its profit. c. the firm is earning zero profit. d. the profits of the firm are negative.

Sagot :

Cricetus

Answer:

Option b (the firm is currently maximizing its profit) is the right approach.

Explanation:

Given values are:

  • [tex]P=20[/tex]
  • [tex]Q=20[/tex]
  • [tex]ATC=18[/tex]

Now,

The profit will be:

= [tex]P\times Q-(ATC\times Q)[/tex]

By substituting the values, we get

= [tex]20\times 20-18\times 20[/tex]

= [tex]400-360[/tex]

= [tex]40[/tex]

Thus, the above is the correct answer.

Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. We appreciate your time. Please come back anytime for the latest information and answers to your questions. Get the answers you need at Westonci.ca. Stay informed with our latest expert advice.