The following curves are for a monopolistically competitive firm. The marginal cost (MC) curve, marginal revenue (MR1) curve, and demand (D1) curve corresponding to each level of output (Q) and price (P) are shown in the graph below.
In the short run, the firm follows the formula and it earn a profit.
Revenue is represented by the rectangle .
Total costs are represented by the rectangle .
Profit is represented by the rectangle .
In the long run, the price per unit of output for the firm equals and it earn a profit.
Profit is .