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.)
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.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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