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In marijuana industry, what is the production and price of marijuana in the monopolistic competition? Draw...

In marijuana industry, what is the production and price of marijuana in the monopolistic competition? Draw graph and explain why?

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Answer #1

In a monopolistic competition, the price and output will be similar to the monopoly market, the only difference will be that the firm under a monopolistic competition will not be earning any profit in the long run. The firm will only be breaking even in the long run.

The production level will be at the point where the marginal cost curve meets the marginal revenue curve. IN the graph below the firm under monopolistic competition is producing quantity Q and price P.

Quantity Q and price P is the point where the firm is maximizing its profit.

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