MT445:What is the highest profit or lowest loss available to this firm?

MT445 / MT 445
Managerial Economics
Kaplan University (KU Campus)

William A. McEachern
Economics: A Contemporary Introduction, 8e
Hoboken, NJ: John Wiley & Sons.

Unit 5: Monopolies, Oligopolies, and Market Structure

Unit 5 Project
Chapter 10 question 8, page 249(Short-Run Profit Maximization) A monopolistically competitive firm
has the following demand and cost structure in the short run:
Output Price FC VC TC TR Profit/Loss
0 $100 $100 $ 0 ____ ____ ________
1 90 ____ 50 ____ ____ ________
2 80 ____ 90 ____ ____ ________
3 70 ____ 150 ____ ____ ________
4 60 ____ 230 ____ ____ ________
5 50 ____ 330 ____ ____ ________
6 40 ____ 450 ____ ____ ________
7 30 ____ 590 ____ ____ ________
a. Complete the table.
b. What is the highest profit or lowest loss available to this firm?
c. Should this firm operate or shut down in the short run? Why?
d. What is the relationship between marginal revenue and marginal cost as the firm increases output?