Monopolistic Competition Use the information below to answer the next 3 question

Question

Monopolistic Competition Use the information below to answer the next 3 questions. Brookside is a producer of golf clubs in a monopolistically competitive industry. The figure below shows the demand (D), marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves for Brookside. Price and cost (dollars per club) 220 ATC MC 80 160 140- 120 80 MR 0 40 80 120 160 200 240 280 320 360 400 440 Quantity (thousands of golf clubs per year) 7. To maximize profit Brookside will produce-golf clubs and charge a price of-_ per club. a. 160,000; $40 b. 160,000; $120 c. 200,000; $100 d. 240,000; $100

Explanation / Answer

Answer

The firm produces at MR=MC where Q=160 thousand and the price at this quantity found from the demand curve is P=$120

option b

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