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This firm operates in a monopolistic competitive industry. When the firm maximizes its profits: a. How much output does it produce and why? b. How much do consumers pay for a unit of the good? How much does the unit cost on average to the firm? c. What is the MR curve and why it is decreasing?

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Pakcricket1000

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The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost: that is, MR = MC. If the monopoly produces a lower quantity, then MR > MC at those levels of output, and the firm can make higher profits by expanding output.

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