Overview
- PLEASE DO APA STYLE - USE POWERPOINTS AS REFERENCE - PLEASE USE ATTACHMENT "exercise 5" FOR FULL QUESTIONS. IT HAS IMAGES I COULD NOT PASTE
BUS 724
EXERCISE 5
Total Points = 5
Section I
Elixir Spring produces a unique and highly prized miner- al water. The firm’s total fixed cost is $5,000 a day, and its marginal cost is zero. The table shows the demand schedule for Elixir water.
Question 1 (1 point)
On a graph, show the demand for Elixir water and Elixir Spring’s marginal revenue curve. What are Elixir’s profit-maximizing price, output, and economic profit?
Question 2 (1 point)
Compare Elixir’s profit maximizing price with the marginal cost of producing the profit-maximizing output. At the profit-maximizing price, is the demand for Elixir water inelastic or elastic?
Section II
Question 3 (1.5 points)
Which of the following items are sold by firms in monopolistic competition? Explain your selections.
- Cable TV service
- Athletic shoes
- Soda
- Toothbrushes
Question 4 (1.5 points)
Use figure below, which shows the demand curve, marginal revenue curve, and cost curves of Lite and Kool, Inc., a producer of running shoes in monopolistic competition
In the short run, what quantity does Lite and Kool produce, what price does it charge, and does it make an economic profit?
- PLEASE DO APA STYLE - USE POWERPOINTS AS REFERENCE - PLEASE USE ATTACHMENT "exercise 5" FOR FULL QUESTIONS. IT HAS IMAGES I COULD NOT PASTE