Question

1) Monopolistic Competition I (6 points) The table below shows data for Flo's Beach Ball Company, a monopolistically competitive firm. Price Quantity Total Cost TR MR MC $10 $50 $53 $8 $57 $7 $62 $6 $68 a. Use the columns above to calculate Total Revenue, Marginal Revenue, and Marginal Cost at each output level. b. In order to maximize profit, how many beach balls should Flo's Company produce, and what price should the firm charge? c. At the profit-maximizing output level, what is the firm's total profit? d. Given your answer from (b), what will happen to the beach ball industry in the long-run? [Describe the steps that will occur.] What will happen to the profits for Flo's Company?

Answer 1

TR = PXQ G PR - AIR TRA - TA, I AQ 82-QI - MC = ATC - TC₂ - TC, QR-QI profit - TR-TC Day 1 the TR = P x 4 Price (Quantity I & 7 8 Profit Aio fatalbot TR I MR Mc $50 / 60 $53 63 / 3 $57 64 III 4 $62 368 - doo

(b) According to table in previous question In order to maximize profit , 6 balls should be produced by company at $10 to earn maximum.profit. or one another option to earn maximum profit is to produce 7 balls at $9.

(c) At the profit maximizing output level , Firm's total profit is $10.