Consider Unico Doughnut, a doughnut shop in a competitive price-searcher market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Assume that the shop is operating in the short run. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. If the shop is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. If the shop is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. PRICE (Dollars per doughnut) 4.00 3.50 3.00 2.50 ATC 2.00 1.50 1.00 0.50 MC Demand MR 0 0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 QUANTITY (Thousands of doughnuts) Profit Maximizing Outcome Profit Loss ? At the profit-maximizing output and price, the shop's profit is equal to $ Given the profit-maximizing choice of output and price, there are . (Hint: Be sure to enter a minus sign if profit is negative.) shops in the industry than there would be in long-run equilibrium.
Consider Unico Doughnut, a doughnut shop in a competitive price-searcher market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Assume that the shop is operating in the short run. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. If the shop is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. If the shop is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. PRICE (Dollars per doughnut) 4.00 3.50 3.00 2.50 ATC 2.00 1.50 1.00 0.50 MC Demand MR 0 0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 QUANTITY (Thousands of doughnuts) Profit Maximizing Outcome Profit Loss ? At the profit-maximizing output and price, the shop's profit is equal to $ Given the profit-maximizing choice of output and price, there are . (Hint: Be sure to enter a minus sign if profit is negative.) shops in the industry than there would be in long-run equilibrium.
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter10: Price-searcher Markets With Low Entry Barriers
Section: Chapter Questions
Problem 16CQ
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