Profit maximization of a seller in a monopollstically competitive market The pro

Question

Profit maximization of a seller in a monopollstically competitive market

The profit-maximizing level of output is (600, 720, 810) bagels per day at a price of ($1.50, $2.10, $2.25, $2.50, $3) each.

At the profit-maximizing output and price, the store's profit equals (-$150, -$450, -$600, $0, $150, $450, $600).

Given the profit-maximizing choice of output and price, the store is making (Negative, Zero, Pozitive) profit, which means that there are (More, An equal number of, Fewer) stores in the industry relative to the long-run equilibrium.

Explanation / Answer

1. 600 (MR=MC)

2. $2.50 (Price seen from demand curve at Q=600)

3. $150 (Pr0fit = 2.50*600 - 600*AC) where AC = $2.25

4. Positive

5. Fewer (In long run more firms will enter as existing firms earn positive profits)

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.