Question

Graph clearly with labels as instructed please. Indicate the right answer Thank you

The graph shows the demand curve, marginal revenue curve, and marginal cost curve of Big Splash, Inc., a producer of wading pools in monopolistic competition. 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. Price and cost (dollars per pool) MC 2804 260 ATC Big Splash's markup is a pool. Big Splash's excess capacity is Big Splash's economic profit is 220 MR 0 10 20 30 40 50 60 70 80 Quantity (pools per week) Draw only the objects specified in the question

Answer 1

(where MR = MC) point A rightarrow profit max Eqm Vertical Line rightarrow DC (markup rightarrow P - Mc = 240 - 180 = 60 eqn O/P is found from dd curve Corresponding to q^M = 30 Rectangle ABCD rightarrow ECO pi shape pi = (P - ATC) Q, at Q = 30, ATC = MC = 180 eco pi = (240 - 180) times 30 = 60 times 30 = $1800 Excess capacity rightarrow difference b/w current o/p level of efficient o/p level, [Where ms cuts ATC] Thus excess capacity = zero [b coz MC cuts ATC at point B].