Econoburgers, a fast-food restaurant in a crowded local market, has reached a long-run equilibrium. ...

Question

Econoburgers, a fast-food restaurant in a crowded local market, has reached a long-run equilibrium.

a. Draw a diagram showing demand, marginal revenue, average total cost, and marginal cost curves for Econoburgers.

b. How much profit is Econoburgers making?

c. Suppose that the government decides to regulate burger production to make it more efficient. Explain what would happen to the price of Econoburgers and the firm’s output.

Robert · Accepted Answer

a. Figure given below illustrates the market for Econ-o-burgers in long-run equilibrium. The 
profit-maximizing level of output is QM and the price is PM.
b. Sparkle's profit is zero, since at quantity QM, price equals average total cost. 
c.

Econoburgers, a fast-food restaurant in a crowded local market, has reached a long-run equilibrium. a. Draw a diagram showing demand, marginal revenue, average total cost, and marginal cost curves for...

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