Price and cost (dollars) 16 14 12 10 2 50 MR 100 SMC ATC AVC 150 Output Refer to the figure above depicting the demand and cost curves for a monopolistically competitive firm (SMC-short run MC). Note: To get credit for correct answers, you must show your work or describe how you got your answers. a) What is the profit-maximizing or loss-minimizing level of output for the firm? (b) What is the profit-maximizing/loss minimizing price the firm will charge? (c) What is the maximum profit or minimum loss for the firm (specify whether it is profit or loss and how much)? (d) is the firm in short run or long run equilibrium? Explain.
Price and cost (dollars) 16 14 12 10 2 50 MR 100 SMC ATC AVC 150 Output Refer to the figure above depicting the demand and cost curves for a monopolistically competitive firm (SMC-short run MC). Note: To get credit for correct answers, you must show your work or describe how you got your answers. a) What is the profit-maximizing or loss-minimizing level of output for the firm? (b) What is the profit-maximizing/loss minimizing price the firm will charge? (c) What is the maximum profit or minimum loss for the firm (specify whether it is profit or loss and how much)? (d) is the firm in short run or long run equilibrium? Explain.
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