Figure 10.5 shows the demand, marginal revenue, and cost curves for a monopolistically competitive firm. At the profit-maximizing (or loss-minimizing) output and price, the firm would: Figure 10.5. Price 3.25 3.00 2.50 0 700 Quantity 1,000 MC MR ATC D AR be earning zero economic profit. be earning an economic profit. be earning an economic loss. be better off shutting down since total revenue does not cover fixed costs. O have to expand to stay in business in the long run.

Answering all questions compulsory...

Marginal revenue and marginal cost intersect at point

*2

Part II | The graph below shows a monopolistically competitive firm in the short run. Price and Cost 8 9 8 20 0 100 MR 200 300 400 500 600 700 800 Output MC 9. What is the firm's profit-maximizing price and quantity? 10. How much profit does that firm make at that price and quantity? 900 ATC -d-p

The table below shows the total cost (TC) and marginal cost (MC) for Choco Lovers, a monopolistic firm producing different quantities of chocolate gift boxes. Fill in the blanks in the table. Quantity 0 5 10 15 20 25 30 Price $22 20 16 14 12 10 Profit Profit-maximizing quantity Profit-maximizing price 18 Total Revenue 50 100 180 240 280 300 300 Total Cost $50 55 57.5 62.5 72.5 122.5 Marginal Cost Marginal Revenue $1 0.5 2 4 6 1 10 12 8 Instructions: Enter your answers as whole numbers. For profit, round your answer to 2 decimal places. 0 20

33 $100 $90 MC АТС $80 E of $70 $60 $50 $40 $30 Demand = P $20 $10 MR $0 10 20 30 40 50 60 Output (Q) The firm shown in the diagram above is in long run equilibrium in a monopolistically competitive market. According to the graph, the Markup is Select one: а. $40 b. $60 с. $50 d. $30