Fill in the values in the Marginal Cost Total Revenue and Ma

Fill in the values in the Marginal Cost, Total Revenue, and Marginal Revenue columns in the following table and then answer the questions that follow. Quantity (Board games) (Dollars per game) (Dollars) (Dollars) Price Total Cost Marginal Cost Total Revenue (Dollars) Marginal Revenue (Dollars) Average Total Cost Dollars) 12.00 10.00 7.00 6.00 5.00 4.00 2.00 1.00 10 16 18 20 35 48 70 96 2 4 8 Under monopolistic competition, a typical firm will produce board games at a price of $ per board game in the short run Based on your calculations, the firm will Fill in the Average Total Cost column in the previous table Based on your calculations, the level of excess capacity in this monopolistically competitive market is

Solution

Q

P

TC

MC

TR

MR

ATC

Profit

1

12

10

12

10

2.0

2

10

16

6

20

8

8

4.0

3

7

18

2

21

1

6

3.0

4

6

20

2

24

3

5

4.0

5

5

35

15

25

1

7

-10.0

6

4

48

13

24

-1

8

-24.0

7

2

70

22

14

-10

10

-56.0

8

1

96

26

8

-6

12

-88.0

a typical firm will produce 2 board games at a price of $10 per board game in the short run

Based on your calculation, the firm will earn profits

the level of excess capacity is 2, which is the difference between quantity at lowest ATC and quantity at maximum profit. (4-2 = 2)

Q	P	TC	MC	TR	MR	ATC	Profit
1	12	10		12		10	2.0
2	10	16	6	20	8	8	4.0
3	7	18	2	21	1	6	3.0
4	6	20	2	24	3	5	4.0
5	5	35	15	25	1	7	-10.0
6	4	48	13	24	-1	8	-24.0
7	2	70	22	14	-10	10	-56.0
8	1	96	26	8	-6	12	-88.0