Question

Suppose that a monopolistically competitive restaurant is currently serving 230 meals per day (the output where MR = MC). At that output level, ATC per meal is $10 and consumers are willing to pay $12 per meal. What is the firm’s profit or loss? Will there be entry or exit? Will this restaurant’s demand curve shift left or right? In long-run equilibrium, suppose that this restaurant charges $11 per meal for 180 meals and that the marginal cost of the 180th meal is $8. What is the firm’s profit? Suppose that the allocatively efficient output level in long-run equilibrium is 200 meals. Is the deadweight loss greater than or less than $60? Explain. 4. In the small town of Geneva, there are 5 firms that make watches. The firms’ respective output levels are 30 watches per year, 20 watches per year, 20 watches per year, 20 watches per year, and 10 watches per year. What is the four-firm concentration ratio for the town’s watch-making industry?

          Suppose that a monopolistically competitive restaurant is currently serving 230 meals
per day (the output where MR = MC). At that output level, ATC per meal is $10 and
consumers are willing to pay $12 per meal. What is the firm’s profit or loss? Will there be
entry or exit? Will this restaurant’s demand curve shift left or right? In long-run
equilibrium, suppose that this restaurant charges $11 per meal for 180 meals and that
the marginal cost of the 180th meal is $8. What is the firm’s profit? Suppose that the
allocatively efficient output level in long-run equilibrium is 200 meals. Is the deadweight
loss greater than or less than $60? Explain.
4. In the small town of Geneva, there are 5 firms that make watches. The firms’ respective
output levels are 30 watches per year, 20 watches per year, 20 watches per year, 20
watches per year, and 10 watches per year. What is the four-firm concentration ratio for
the town’s watch-making industry?

Added by Jose Ignacio E.

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