Output 1 2 3 4 5 6 7 Total Cost($) 30 32 36 42 52 64 78 question: if this firm is in a typical monopolistically completive market, when marginal revenue is $110 and the price is $12, how many unit of output will it likely produce in the short run

Economics Dec 01, 2020

Output 1 2 3 4 5 6 7

Total Cost($) 30 32 36 42 52 64 78

question: if this firm is in a typical monopolistically completive market, when marginal revenue is $110 and the price is $12, how many unit of output will it likely produce in the short run.

a. less than 4 unit of output

b. 4 unit of output

c. 5 unit of output

d. more than 5 unit of output

Expert Solution

So, the correct option is C "5 units of output".

For Equilibrium,

MR = MC = 10

MC is equal to 10 at 5 units.

Workings:

MC = Change in Total Costs (TC) / Change in Output (Q)

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