There are 10 burger joints in Eastville and each one sells a slightly different variety of burger. The burger market in Eastville can be characterized by monopolistic competition. The following diagram shows the demand curve (D), marginal revenue curve (MR), marginal cost curve (MC) and average total cost curve (ATC) for a typical burger joint in this market.
Part 1: Use a vertical drop line to indicate the short-run quantity produced by a typical burger joint in this market (Qp). Make sure that the highest point of the drop line for Qp is placed on the marginal cost curve.
Part 2: Use a horizontal drop line to indicate the short-run price charged by a typical burger joint (Pp). Make sure that the end of the drop line for Pp is placed on the demand curve.
Part 3: Use a horizontal drop line to indicate the average total cost incurred by a typical burger joing in the short run (ATCp). Make sure that the end of the drop line is placed on the average total cost curve.
Part 4: Use the quadrilateral tool to show the level of profit or loss for the typical burger joint, and label accordingly.