Homework Answers
Initial MR and D curves belongs to short run. Later MR and D curves belong to long run.
Monopolistic competitive firms produces at MC=MR.
a.b. MC=MRinitial at Q=6 corresponding price level on the demand curve is P= $12.
Profit= (P-ATC)*Q= (12-8)*6= $24
So, Price= $12
Quantity= 6 units
Profit= $24
c.d. MC=MRlater At Q=5 corresponding price level on the demand curve is P= $9.
Profit= (P-ATC)*Q= (9-9)*5= $0
So, Price= $9
Quantity= 5 units
Profit= $0
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