Profit Maximization for a Firm in Monopolistic Competition
| 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’ After the innovation reduced the cost, the firm’s maximum economic profit is:
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| 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’ 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:
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