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daogrady daogrady
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A year ago

The diagram below shows demand and cost curves for a monopolistically competitive firm.

Short description: A graph plots output against dollars per unit. Long description: The horizontal axis representing output lists the following values from left to right: Q subscript 1 and Q subscript 2. The vertical axis representing dollars per unit lists the following values from top to bottom: P subscript 1 and P subscript 2. The graph plots two lines and two curves. The curve, LRAC passes through the following points: (Q subscript 1, P subscript 1) and (Q subscript 2, P subscript 2). The graph plots two curves and two lines. The curve, MC passes through the point, (Q subscript 2, P subscript 2). The line demand passes through the following points: (Q subscript 1, P subscript 1). The line, MR is decreasing. The two curves intersect at E subscript 2 (Q subscript 2, P subscript 2). The curve, LRAC intersects the line, Demand at point E subscript 1 (Q subscript 1, P subscript 1). The curve, MC intersects the line, D and line, MR.

FIGURE 11-4

Refer to Figure 11-4. Which of the following statements about a monopolistically competitive firm in the long run is correct? This firm will



▸ maximize profit but only break even by producing at Q1 and charging price P1.

▸ maximize profit and make positive profit by producing at Q1 and charging price P1.

▸ make profit by producing at Q2 and charging price P1.

▸ maximize profit by producing output level Q2, the minimum point of its LRAC curve.

▸ lose money by producing at Q1 and charging price P2.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
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carducbcarducb
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