Short run profit maximization A monopolistically competitive firm faces the following demand and cost structure in the short run:
Output Price FC VC TC TR Profit/loss
0 $100 $100 $0 ___ ___ ___/___
1 90 ___ 50 ___ ___ ___/___
2 80 ___ 90 ___ ___ ___/___
3 70 ___ 150 ___ ___ ___/___
4 60 ___ 230 ___ ___ ___/___
5 50 ___ 330 ___ ___ ___/___
6 40 ___ 450 ___ ___ ___/___
7 30 ___ 590 ___ ___ ___/___
a. complete the table
b. What is the highest profit or lowest loss availability to this firm?
c. Should this firm operate or shut down in the short run? Why?
d. What is the relationship between marginal revenue and marginal cost as the firm increases output?