Suppose that an oligopolistically competitive restaurant is currently serving 230 meals per day (the...

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Suppose that an oligopolistically 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 size of this 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 size of the firm's profit. Suppose that the allocatively efficient output level in long-run equilibrium is 200 meals. Is the deadweight loss for this firm greater than or less than $60?

David · Accepted Answer

Suppose that an oligopolistically 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
l. 
What is the size of this firm’s profit or loss?
Profits =TR-TC = (P*Q) –( ATC *Q) =  (P-ATC)*Q = (12-10)*230= 460
Will there be entry or exit?
We cannot say for sure.

Suppose that an oligopolistically 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...

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