5. Consider the diagram below where the demand curve (D) and marginal cost curve (MC) of an Industry Is depicted. There is no fixed cost.
5. Consider the diagram below where the demand curve (D) and marginal cost curve (MC) of an Industry Is depicted. There is no fixed cost. If the industry is a singie-price monopoly, the monopolist's marginal revenue curve would be MR. Answer the following questions by naming the appropriate points or areas. (a) If the industry is a single-price monopoly, what quantity will the monopolist produce? AND what price will it charge? (3) (b) which area reects the monopolist's profit? (1) (c) which area reflects consumer surplus under monopoly? (3) (d) Which area reflects producer surplus under monopoly? (2) (e) If the industry is perfectly competitive. what will be the total quantity produced? At what price? (3) (f) Which area reects consumer surplus under perfect competition? (2) (g) Which area reects producer surplus under perfect competition? (2) (h) Which area represents the dead-weight loss to society created by the monopoly? (3) Page 3 of 4 6. Flying Food is a small catering company providing catered meals and snacks locally and the catering Industry Is perfectly competitive. Flying Food has a fixed cost of 100 Taka and their variable cost includes the wages of their cooks and the cost of the food Ingredients. The table below represents the variable cost associated with each level of output. Quantity of meals EC (in Taka) 0 200 300 480 700 1000 unwrap-o (a) Calculate the total cost, the average variable cost (AVE), the average total cost (ATC), and the marginal cost (MC) for each quantity of output. (6) (b) What is the break-even price? What Is the shut-down price? (4) (c) If the price of the catered meal is 130 Taka, what is their profit maximizing/toss minimizing output? (1) (d) Now suppose that the price at which Flying Food can sell catered meals Is 210 Take per meal. In the short run, wiil they earn a profit/loss? In the short run, should they produce or shutdown? (3) (e) Suppose that the price at which Flying Food can sell catered meals Is 110Taka per meal. In the short run, wiil they earn a profit/loss? In the short run, should they produce or shut down\":I (3) (f) Suppose that the price at which Flying Food can sell catered meals is 130 Take per meal. In the short run, will they earn a profit/loss? In the short run, should they produce or shut down? (3)
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