The market for toothpaste is a monopolistically competitive market. The graph below depicts the demand and marginal revenue curves for this market and the marginal cost and average total cost curves of a monopolistically competitive supplier. Price $10.50 $9.00 $7.50 $6.00 $4.50 $3.00 $1.50 20 b. Price at the Q in a. c. TR (PxQ). 40 60 MR MC ATC: Demand Using the above chart, identify the profit-maximizing quantity of toothpaste that the monopolistically competitive firm should produce, and the per-tube price that it should charge. a. Quantity (chart is in thousands) 80 100 140 120 Quantity (thousands of tubes)

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**Microeconomics 2463 Assignment Part 1 – Chapter 15**

**Name:** ___________________________

The market for toothpaste is a monopolistically competitive market. The graph below depicts the demand and marginal revenue curves for this market and the marginal cost and average total cost curves of a monopolistically competitive supplier.

**Graph Explanation:**

- **X-Axis:** Quantity (thousands of tubes)
- **Y-Axis:** Price
- **Curves Present:**
  - **Demand Curve**: Downward sloping, indicating the relationship between price and quantity demanded.
  - **MR (Marginal Revenue) Curve**: Downward sloping, below the demand curve, representing additional revenue from selling one more unit.
  - **MC (Marginal Cost) Curve**: Upward sloping, indicating the cost of producing one more unit.
  - **ATC (Average Total Cost) Curve**: U-shaped, indicating the average cost per unit at different production levels.

**Using the above chart, identify the profit-maximizing quantity of toothpaste that the monopolistically competitive firm should produce, and the per-tube price that it should charge.**

a. **Quantity (chart is in thousands) __________________**

b. **Price at the Q in a. _____________________________**

c. **TR (P x Q) _____________________________________**

d. **TC (ATC x Q) ___________________________________**

e. **Profit (TR - TC) ________________________________**

f. **What will happen in this industry in the long-run based on profits in part e?**

g. **What will happen to the demand curve for this particular firm in the long-run based on part f?**
Transcribed Image Text:**Microeconomics 2463 Assignment Part 1 – Chapter 15** **Name:** ___________________________ The market for toothpaste is a monopolistically competitive market. The graph below depicts the demand and marginal revenue curves for this market and the marginal cost and average total cost curves of a monopolistically competitive supplier. **Graph Explanation:** - **X-Axis:** Quantity (thousands of tubes) - **Y-Axis:** Price - **Curves Present:** - **Demand Curve**: Downward sloping, indicating the relationship between price and quantity demanded. - **MR (Marginal Revenue) Curve**: Downward sloping, below the demand curve, representing additional revenue from selling one more unit. - **MC (Marginal Cost) Curve**: Upward sloping, indicating the cost of producing one more unit. - **ATC (Average Total Cost) Curve**: U-shaped, indicating the average cost per unit at different production levels. **Using the above chart, identify the profit-maximizing quantity of toothpaste that the monopolistically competitive firm should produce, and the per-tube price that it should charge.** a. **Quantity (chart is in thousands) __________________** b. **Price at the Q in a. _____________________________** c. **TR (P x Q) _____________________________________** d. **TC (ATC x Q) ___________________________________** e. **Profit (TR - TC) ________________________________** f. **What will happen in this industry in the long-run based on profits in part e?** g. **What will happen to the demand curve for this particular firm in the long-run based on part f?**
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