The graph to the right depicts the demand for caffe lattes at a local coffeehous

Question

The graph to the right depicts the demand for caffe lattes at a local coffeehouse along with the average total cost and marginal cost of producing lattes. Suppose the coffeehouse is in a monopolistically competitive market in the short run. How many caffe lattes should this coffeehouse produce to maximize profits? units. (Enter a numeric response using an integer.) What is the corresponding profit-maximizing price? $ per latte. (Enter a numeric response using a real number rounded to two decimal places.) Calculate the coffeehouse's profits on caffe lattes. (Enter a numeric response using a real number rounded to two decimal places.)

Explanation / Answer

Average total cost = 3.63 at 30 units. so, total cost = 3.63*30 = 108.90

Revenue = 30 * 4 = 120

Profit = 120 -108.90 = $11.1

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