Concept
Version 6
Created by Boundless
Short Run Outcome of Monopolistic Competition
![Short Run Equilibrium Under Monopolistic Competition.](../../../../../../../../../figures.boundless-cdn.com/20455/full/r-monopolistic-competition.jpeg)
Short Run Equilibrium Under Monopolistic Competition.
As you can see from the chart, the firm will produce the quantity (Qs) where the marginal cost (MC) curve intersects with the marginal revenue (MR) curve. The price is set based on where the Qs falls on the average revenue (AR) curve. The profit the firm makes in the short term is represented by the grey rectangle, or the quantity produced multiplied by the difference between the price and the average cost of producing the good.
Source
Boundless vets and curates high-quality, openly licensed content from around the Internet. This particular resource used the following sources:
"Short-run equilibrium of the firm under monopolistic competition."
http://commons.wikimedia.org/wiki/File:Short-run_equilibrium_of_the_firm_under_monopolistic_competition.JPG
Wikimedia
GNU FDL.