Demand and Cost Data for Will's Beach Ball Company

Price Demand Data Quantity Cost Data Output Total Cost

$11 6 6 $48

$10 7 7 $52

$9 8 8 $57

$8 9 9 $63

$7 10 10 $70

Table $26.1$ A Monopolistically Competitive Firm Refer to Table 26.1.At the profit-maximizing output and price, Will's Beach Ball Company will earn a ________ Economic profit, and ________ the market will occur. A) negative; exit from B) negative; entry into C) positive; exit from D) positive; entry into

Question

Demand and Cost Data for Will's Beach Ball Company

Price	Demand Data Quantity	Cost Data Output	Total Cost
$11	6	6	$48
$10	7	7	$52
$9	8	8	$57
$8	9	9	$63
$7	10	10	$70

Table $26.1$ A Monopolistically Competitive Firm Refer to Table 26.1.At the profit-maximizing output and price, Will's Beach Ball Company will earn a ________ Economic profit, and ________ the market will occur. A) negative; exit from B) negative; entry into C) positive; exit from D) positive; entry into

Quizplus · Accepted Answer

To determine the profit-maximizing output and price, we need to look for where marginal revenue (MR) equals marginal cost (MC). Without explicit MR and MC data, we can infer from the demand and cost data. As price decreases, demand increases, indicating a downward-sloping demand curve typical for monopolistic competition. The profit-maximizing point is not explicitly given, but firms in monopolistic competition aim to produce where MR=MC, which typically results in economic profits in the short run due to product differentiation and market power. Positive economic profits attract entry into the market, as other firms seek to capitalize on the opportunity.