Use the information in this table tocalculate total revenue, marginal revenue, and marginal costs. Indicate the profit-maximizing level ofoutput. What market structure is this firm operating in? What would change if the structure were monopolistic competition? OUTPUT PRICE (GH¢) TOTAL COST (GH¢) 1 5 10 2 5 12 3 5 15 4 5 19 5 5 24 6 5 30 7 5 45
a. Use the information in this table tocalculate total revenue, marginal revenue, and marginal costs. Indicate the profit-maximizing level ofoutput. What market structure is this firm operating in? What would change if the structure were
| OUTPUT | TOTAL COST (GH¢) | |
| 1 | 5 | 10 |
| 2 | 5 | 12 |
| 3 | 5 | 15 |
| 4 | 5 | 19 |
| 5 | 5 | 24 |
| 6 | 5 | 30 |
| 7 | 5 | 45 |
b. Under what circumstances would a large size provide an advantage to a firm? How could it serve as a barrier to entry?
c. You and your rival must simultaneously decide what price to advertise in the weekly newspaper. If you each charge a low price, you each earn zero profits. If you each charge a high price, you each earn profits of GH¢3. If you charge different prices, the one charging the higher price loses GH¢5 and the one charging the lower price makes GH¢5.i. Find the equilibrium when there are no repeated transactions.ii. Now suppose there are repeated transactions. How would that change the results?
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