Question

Please answer all questions

The graph shows the demand curve, marginal revenue curve, and marginal cost curve of Stiff Shirt, Inc., a producer of shirts in monopolistic competition Price and cis! İdIn per shit) MC Draw a point at the firm's profit-maximizing price and quantity. Draw a vertical arrow that shows the firm's markup Draw a shape that shows the firm's economic profit. ATC Siff Shirt's markup is Sa shirt Stiff Shirt's excess capacity is Stiff Shirt's economic profit is Quansty(shirts per week) >>> Draw only the objects specified in the question.

Answer 1

The firm maximizes the profit where the marginal cost equals the marginal revenue of the production. The mark up is the difference between the price and the marginal cost and it is indicated by the upward arrow in the graph. There is no excess capacity the firm produces at the lowest point on the average cost curve so it is efficient. The firm is making a positive economic profit.

Economic profit Price MC ATC 120 80 MR 60 Quantity

1. The mark up is $ 40 per shirt.

2. The excess capacity is zero.

3. The economic profit is 2400.

a. An oligopoly is characterized by small many sellers in the market and the barriers to entry allows them enjoy a larger share of the market.

Ans: b). An oligopoly.

b. The oligopoly market can make profit in the long run because there is barriers of entry .