C Assume that Roscoes Rascals decided to add the pet food li

C. Assume that Roscoe\'s Rascals decided to add the pet food line. Two months after it began selling the food, its pet food sales declined dramatically because a competitor across the street started selling the identical food for $22 per bag. Q8. What is the marginal cost of each bag of specialty pet food? Q9. What is the marginal revenue from selling each bag of specialty pet food? Q10. Should Roscoe\'s Rascals match the price offered by the competitor?

Solution

8) Identical food sold fr 22$ per bag . So there is perfect competition . In PC , profit maximization is given by Price = MC (marginal cost) . So MC = 22$ .

9) Marginal Revenue = price of each bag ( Price of each bag is same ) = 22$

10) Yes should match the price offered by competitor since in perfect competition all producers should have identical price to stay in the market .