consider a shop that produces bagels in a monopolistically competitive market. the following graph shows its…

consider a shop that produces bagels in a monopolistically competitive market. the following graph shows its demand curve (demand), marginal revenue curve (mr), marginal cost curve (mc), and average total cost curve (atc). assume that the company is operating in the short - run. the profit - maximizing level of output is bagels per day at a price of $ each. price (dollars per bagel) $7.00 $5.50 $4.00 $2.00 quantity (bagels) 160 230 280 mc atc demand mr

consider a shop that produces bagels in a monopolistically competitive market. the following graph shows its demand curve (demand), marginal revenue curve (mr), marginal cost curve (mc), and average total cost curve (atc). assume that the company is operating in the short - run. the profit - maximizing level of output is bagels per day at a price of $ each. price (dollars per bagel) $7.00 $5.50 $4.00 $2.00 quantity (bagels) 160 230 280 mc atc demand mr

Answer

Explanation:

Step1: Identify profit - max condition

In a monopolistically competitive market, profit is maximized when $MR = MC$.

Step2: Find quantity

From the graph, the intersection of the $MR$ and $MC$ curves occurs at a quantity of 160 bagels per day.

Step3: Find price

To find the price, we go up from the quantity of 160 on the horizontal axis to the demand curve and then across to the vertical - axis. The price corresponding to a quantity of 160 bagels on the demand curve is $7.00 per bagel.

Answer:

160; 7.00