The Table Below Shows the Demand and Cost Data Facing

question 167

Essay

The table below shows the demand and cost data facing "Velvet Touches," a monopolistically competitive producer of velvet throw pillows.
$$\begin{array} { | c | c | c | c | c | c | } \hline \text { Quantity } & \text { Price } & \begin{array} { c } \text { Total } \\\text { Revenue }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Revenue }\end{array} & \text { Total Cost } & \begin{array} { c } \text { Marginal } \\\text { Cost }\end{array} \\\hline 1 & \$ 30 & & & \$ 32 & \\\hline 2 & 28 & & & 43 & \\\hline 3 & 26 & & & 53 & \\\hline 4 & 24 & & & 64 & \\\hline 5 & 22 & & & 76 & \\\hline 6 & 20 & & & 90 & \\\hline 7 & 18 & & & 106 & \\\hline 8 & 16 & & & 126 & \\\hline\end{array}$$
Use the data to answer the following questions.
a.Complete the Total Revenue (TR),Marginal Revenue (MR)and Marginal Cost (MC)columns above.
b.What are the profit-maximizing price and quantity for Velvet Touches?
c.Is the firm making a profit or a loss? How much is the profit or loss? Show your work.
d.Is this firm operating in the long run or in the short run? Explain your answer.
e.If the firm's profit or loss is typical of all firms in the market for throw pillows,what is likely to happen in the future? Will there be more firms or will some existing firms leave the industry? Explain your answer.
f.What will happen to the typical firm's profit or loss after all entry/exit adjustments?

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Definitions:

Do…while Statement

A control flow statement that executes a block of code at least once and then repeatedly executes the block as long as a given condition remains true.

Branching Mechanisms

The feature in programming and version control systems that allows for the divergence from the main line of development, to experiment or to work on different tasks simultaneously.

Break Statements

Instructions in programming that cause the immediate termination of a loop, switch, or labeled block.

Switch Statement

A switch statement is a control flow statement that allows a variable to be tested against a list of values, each with its own code block to execute.