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Bob competes in a monopolistically competitive market. Suppose some new firms enter the market, causing his perceived demand curve to shift. The following tables show

Bob competes in a monopolistically competitive market. Suppose some new firms enter the market, causing his perceived demand curve to shift. The following tables show his demand curves, before and after the change, and his cost information.

Assume that Bob can only choose from the quantities of output given in the table. By how much will his profit change after these new firms enter the market?

Original Demand Curve

Price

Quantity

TC

$33

0

$20,000

$32

1,000

$30,000

$31

2,000

$45,000

$30

3,000

$70,000

$29

4,000

$100,000

New Demand Curve

Price

Quantity

TC

$30

0

$20,000

$29

1,000

$30,000

$28

2,000

$45,000

$27

3,000

$70,000

$26

4,000

$100,000

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