Profit Maximization

Part 2 of 2 – Profit
Maximization for a Firm in Monopolistic Competition

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(Exhibit: Profit Maximization
for a Firm in Monopolistic Competition) Suppose that an innovation reduces
a firm’s fixed costs and reduces cost from ATC to ATC’ Before the innovation
reduced the cost, the firm’s maximum economic profit was:

A.$0.

B.$30.

C.$750.

D.$4,500.

Part 2 of 2 – Profit Maximization
for a Firm in Monopolistic Competition

(Exhibit: Profit Maximization for
a Firm in Monopolistic Competition.) Suppose that an innovation reduces a
firm’s fixed costs and reduces cost from ATC to ATC’ After the innovation
reduced the cost, the firm’s maximum economic profit is:

A.$0.

B.$30.

C.$1,500.

D.$3,000.

Part 2 of 2 – Profit Maximization
for a Firm in Monopolistic Competition

(Exhibit: Profit Maximization for
a Firm in Monopolistic Competition) Suppose that an innovation reduces a
firm’s fixed costs and reduces cost from ATC to ATC’ Suppose further that
after the innovation reduced the cost to ATC?, it costs a total of $18 per
unit to produce 170 units per day. If the firm charges a price equal to
marginal cost, total net profit will be:

A.$1,700.

B.$1,190.

C.$3,060.

D.$3,400.