2. Profit maximization of a seller in a competitive price-searchermarket Consider Unico Doughnut, a doughnut shop in a competitive price-searcher market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. 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 aree 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 (Delars per dough) 350 1.50 1.00 ● 05 10 18 ATC MR QUANTITY (Thousands of doughnuts) Demand 35 40 At the profit-maximizing output and price, the shop's profit is equal to 1 Given the profit-maximizing choice of output and price, there are Proft Maximizing Outcome Loss (Hint: Be sure t shops in the industry than there would be in long-run equilibrium. enter a minus sign if profit is negative.)

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
2. Profit maximization of a seller in a competitive price-searchermarket
Consider Unico Doughnut, a doughnut shop in a competitive price-searcher market. The following graph shows its demand curve, marginal revenue
(MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. 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 doughnut)
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0
MC
0
05
ATC
Demand
10 15 20 2.5 3.0 3.5 40
QUANTITY (Thousands of doughnuts)
MR
At the profit-maximizing output and price, the shop's profit is equal to 3
Given the profit-maximizing choice of output and price, there are
Proft Maximizing 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 equilibrium.
Transcribed Image Text:2. Profit maximization of a seller in a competitive price-searchermarket Consider Unico Doughnut, a doughnut shop in a competitive price-searcher market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. 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 doughnut) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0 MC 0 05 ATC Demand 10 15 20 2.5 3.0 3.5 40 QUANTITY (Thousands of doughnuts) MR At the profit-maximizing output and price, the shop's profit is equal to 3 Given the profit-maximizing choice of output and price, there are Proft Maximizing 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 equilibrium.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
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)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
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-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education