Assume that in short-run equilibrium, a particular monopolistically competitive restaurant (Applebee's) charges $12 for each order of Chicken Parmesan and sells 52 orders per day. The average total cost (ATC) for those 52 orders is $10. How much revenue will the firm take in each day? $ What will be the firm's economic profit or loss on Chicken Parmesan? Next, suppose that other restaurants add/remove chicken parmesan from their menus (entry or exit occurs) and a long-run equilibrium is established. If the Applebees daily Chicken Parmesan orders remain at 52 units, what price will it be able to charge? $ What will be its economic profit or loss?

Given: Total orders= 52 The selling price is 12 dollars per order Cost price is 10 dollars per order

Assume that in short-run equilibrium, a particular monopolistically competitive restaurant (Applebee's) charges $12 for each order of Chicken Parmesan and sells 52 orders per day. The average total cost (ATC) for those 52 orders is $10. How much revenue will the firm take in each day? $ What will be the firm's economic profit or loss on Chicken Parmesan? Next, suppose that other restaurants add/remove chicken parmesan from their menus (entry or exit occurs) and a long-run equilibrium is established. If the Applebees daily Chicken Parmesan orders remain at 52 units, what price will it be able to charge? $ What will be its economic profit or loss?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 4QFR

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