The above figure shows Antonia’s sandwich shop which is a monopolistic competiti

ID: 1156416 • Letter: T

Question

The above figure shows Antonia’s sandwich shop which is a monopolistic competitive firm. Answer and explain your answers to the following questions.

a) How many sandwiches will Antonia’s sandwich shop produce?

b) What price will Antonia’s sandwich shop produce?

c) What is Antonia’s sandwich shop total cost?

d) What is Antonia’s sandwich shop total revenue?

e) What is Antonia’s sandwich shop economic profit or loss?

f) Is this a long-run equilibrium? Why or why not?

20 MC ATC 6 12 8 4 MR 0 20 40 60 80 100 Quantity (pizzas per day)

A) Profit is maximised when MR=MC Thus quantity=40

B) Price=12 because monopolistic charge at the demand curve

C)TC=40*8=320

D) Total revenue=12*40=480

E) Economic profit=480-320=160

F) long run equilibrium is achieved when P=AtC in monopolistic market. Thus market is not at long run equilibrium.

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