Question

wg intormation for personal fitness training operating in Surrey, BC. The service advertises as providing one-to-one training, using specialized equipment, in a clean small purpose-built facility by a certified fitness trainer, with towel, locker, and nutritious juice services. [5] Price Buong ME Per ring in TH ATC $40 1 $35 2 NO 5 25 15 15 16 1. What market structure is this? Perfect competition, monopoly, or monopolistic competition? (Circle one) 2. What is the profit maximizing rule for this market structure? Profit will be maximized (losses minimized) where Use this rule to determine your answers to the following question: 3. Profit Maximizing Price _Profit Maximizing Quantity Profit 1

Answer 1

1. A firm operates under the monpolistic competition market commonly used advertising in order project how their products are different from their competitor.

Hence, this is a monopolistic competition.

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2. Profit will maximized (losses minimized) where MR = MC

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3.

Price (Per Training Session)	Quantity (Sessions) Demanded per day	TR	MR	MC	ATC	TC	Profit
50	0	0	--	----	---	---	---
40	1	40	40	12	30	30	10
35	2	70	30	5	25	50	20
30	3	90	20	15	15	45	45
25	4	100	10	13	16	64	36

TR = Price * Quantity

MR = (change in TR / Change in quantity)

TC = ATC * Quantity

Profit = TR - TC

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Firm will produce (or provide service) till MR is greater than MC or MR=MC

Till 3 sessions demand, the MR is higher than MC.

So, the profit maximizing quantity is 3.

Price corresponding to 3 units of quantity is 30.

Profit corresponding to 3 units of quantity is 45

Profit maximizing price = $30, Profit maximizing Quantity = 3, Profit = $45