1. Profit maximization of a seller in a competitive price-searcher market Consider De Virtuose Cupcake, a cupcake shop in a competitive price-searcher market. The following graph shows its demand curve (Demand), marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). Assume that the shop is operating in the short run. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. If the shop is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. If the shop is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. PRICE (Dollars per cupcake) 4.00 3.50 3.00 2.50 2.00 ATC 1.50 1.00 0.50 MC 0 0 0.5 1.0 Demand MR 1.5 2.0 2.5 3.0 3.5 4.0 QUANTITY (Thousands of cupcakes) At the profit-maximizing output and price, the shop's profit is equal to $ Given the profit-maximizing choice of output and price, there are equilibrium. Monopoly Outcome Profit Loss (?) (Hint: Be sure to enter a minus sign if profit is negative.) shops in the industry than there would be in long-run
1. Profit maximization of a seller in a competitive price-searcher market Consider De Virtuose Cupcake, a cupcake shop in a competitive price-searcher market. The following graph shows its demand curve (Demand), marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). Assume that the shop is operating in the short run. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. If the shop is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. If the shop is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. PRICE (Dollars per cupcake) 4.00 3.50 3.00 2.50 2.00 ATC 1.50 1.00 0.50 MC 0 0 0.5 1.0 Demand MR 1.5 2.0 2.5 3.0 3.5 4.0 QUANTITY (Thousands of cupcakes) At the profit-maximizing output and price, the shop's profit is equal to $ Given the profit-maximizing choice of output and price, there are equilibrium. Monopoly Outcome Profit Loss (?) (Hint: Be sure to enter a minus sign if profit is negative.) shops in the industry than there would be in long-run
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![1. Profit maximization of a seller in a competitive price-searcher market
Consider De Virtuose Cupcake, a cupcake shop in a competitive price-searcher market. The following graph shows its demand curve (Demand),
marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). Assume that the shop is operating in the short run.
Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. If the shop is making a profit, use the green
rectangle (triangle symbols) to shade in the area representing its profit. If the shop is suffering a loss, use the purple rectangle (diamond symbols) to
shade in the area representing its loss.
PRICE (Dollars per cupcake)
4.00
3.50
3.00
2.50
2.00
ATC
1.50
1.00
0.50
MC
0
0
0.5
1.0
Demand
MR
1.5
2.0
2.5
3.0
3.5
4.0
QUANTITY (Thousands of cupcakes)
At the profit-maximizing output and price, the shop's profit is equal to $
Given the profit-maximizing choice of output and price, there are
equilibrium.
Monopoly Outcome
Profit
Loss
(?)
(Hint: Be sure to enter a minus sign if profit is negative.)
shops in the industry than there would be in long-run](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F55e5aa3a-0d07-45ba-a16f-5f15ce7e32c0%2F3492bd82-fcd1-4f32-b706-792a3972dbe6%2Fh3nwlbo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:1. Profit maximization of a seller in a competitive price-searcher market
Consider De Virtuose Cupcake, a cupcake shop in a competitive price-searcher market. The following graph shows its demand curve (Demand),
marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). Assume that the shop is operating in the short run.
Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. If the shop is making a profit, use the green
rectangle (triangle symbols) to shade in the area representing its profit. If the shop is suffering a loss, use the purple rectangle (diamond symbols) to
shade in the area representing its loss.
PRICE (Dollars per cupcake)
4.00
3.50
3.00
2.50
2.00
ATC
1.50
1.00
0.50
MC
0
0
0.5
1.0
Demand
MR
1.5
2.0
2.5
3.0
3.5
4.0
QUANTITY (Thousands of cupcakes)
At the profit-maximizing output and price, the shop's profit is equal to $
Given the profit-maximizing choice of output and price, there are
equilibrium.
Monopoly Outcome
Profit
Loss
(?)
(Hint: Be sure to enter a minus sign if profit is negative.)
shops in the industry than there would be in long-run
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education