$\text {Demand and Cost Data for Will's Beach Ball Company}$

$\begin{array}{l}
\begin{array}{cccc}
&\text { Demand Data}& \text { Cost Data }\
\text { Price } & \text { Quantity } & \text { Output } & \text { Total Cost } \
\$ 11 & 6 & 6 & \$ 48 \
\$ 10 & 7 & 7 & \$ 52 \
\$ 9 & 8 & 8 & \$ 57 \
\$ 8 & 9 & 9 & \$ 63 \
\$ 7 & 10 & 10 & \$ 70
\end{array}
\end{array}$

$\text {Table $26.1$}$
$\text {A Monopolistically Competitive Firm}$ 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.

Question

$\text {Demand and Cost Data for Will's Beach Ball Company}$

$\begin{array}{l}
\begin{array}{cccc}
&\text { Demand Data}& \text { Cost Data }\
\text { Price } & \text { Quantity } & \text { Output } & \text { Total Cost } \
\$ 11 & 6 & 6 & \$ 48 \
\$ 10 & 7 & 7 & \$ 52 \
\$ 9 & 8 & 8 & \$ 57 \
\$ 8 & 9 & 9 & \$ 63 \
\$ 7 & 10 & 10 & \$ 70
\end{array}
\end{array}$

$\text {Table $26.1$}$
$\text {A Monopolistically Competitive Firm}$  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.

Quizplus · Accepted Answer

positive; entry into.To determine the profit-maximizing output, we need to find where marginal cost (MC) equals marginal revenue (MR). Since the table doesn't provide explicit MC or MR, we can infer them from the total cost and demand data. The profit-maximizing output is typically where additional revenue from selling one more unit equals the additional cost of producing that unit.Looking at the cost data, the increase in total cost as output increases gives us an idea of the marginal cost. For example, going from 6 to 7 units increases total cost from $48 to $52, a marginal cost of $4. Similarly, revenue increases as price decreases and quantity sold increases, indicating marginal revenue.Without explicit MR and MC, we can't precisely identify the profit-maximizing output, but we can infer that the firm is designed to find a point where MR = MC. Assuming it successfully does so, it will earn a positive economic profit because monopolistically competitive firms have some degree of market power due to product differentiation, allowing them to set prices above marginal costs temporarily.Positive economic profit attracts new firms to the market, leading to entry, not exit. Over time, the entry of new firms will erode the firm's market power and economic profit, but initially, the scenario described would lead to entry into the market, not exit.

Demand and Cost Data for Will’s Beach Ball Company\text {Demand and Cost Data for Will's Beach Ball Company}Demand and Cost Data for Will’s Beach Ball Company

$\text {Demand and Cost Data for Will's Beach Ball Company}$