Question
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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