QUESTION 23 The following graph shows a firm producing jeans in a mosopolistical

Question

QUESTION 23 The following graph shows a firm producing jeans in a mosopolistically competitive market. The firm faces a downward-skoping, linear demand curve, D The marginal revenue curve of the firm is shown by MR. AC and MC are the average total cost and marginal cost curves of the firm. Which of the following is likely to true of the firm at the Figure 9.3: Price (S) MC AC soA: O 4 7 10 11 Pairs of jeans per month aThe firm will probee 11,000 pairs ofjeans each month. Ob. The firm will produce 7,00 pairs of jeans each month. c. Te firm will produce 10,000 pairs ofjeans each month. O d.The firm will charge a price of $48 per pair of jeans. # e. The firm will charge a price or su per pair ofyans. MacBook Air

Explanation / Answer

Ans:

23)

Option B

The firm will produce 7000 pairs of jeans each month

In order to maximize profits a monopolistically competitive firm will produce at the point where marginal revenue is equal to marginal cost.In this case the firm will produce 7000 pairs of jeans each month at a price of $50.

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