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 available 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?
2. Why would each of the following induce some members of OPEC to cheat on their cartel agreement?
a. Newly joined cartel members are less-developed countries.
b. The number of cartel members doubles from 11 to 22.
c. International debts of some members grow.
d. Expectations grow that some members will cheat