**Exercise 5** Suppose that a monopolistically competitive restaurant is currently serving 230 meals per day (the output where MR = MC). At that output level, the average total cost (ATC) per meal is $10, and consumers are willing to pay $12 per meal. **Instructions:** Enter your answers as whole numbers. a. What is the size of this firm’s profit or loss? - [Answer box] b. Will there be entry or exit? - [Dropdown menu] Will this restaurant’s demand curve shift left or right? - [Dropdown menu] c. Suppose that the allocatively efficient output level in long-run equilibrium is 200 meals. In long-run equilibrium, suppose that this restaurant charges $11 per meal for 180 meals and that the marginal cost of the 180th meal is $8. What is the size of the firm’s economic profit? - [Answer box] d. Suppose that the allocatively efficient output level in long-run equilibrium is 200 meals. In long-run equilibrium, suppose that this restaurant charges $11 per meal for 180 meals and that the marginal cost of the 180th meal is $8. Is the deadweight loss for this firm greater than or less than $60? - [Dropdown menu] **Notes:** - This problem illustrates concepts in monopolistic competition, such as profit maximization, long-run equilibrium, demand curve shifts, and deadweight loss. - McGraw Hill Education is noted as the publisher of the material.

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