Economics

Presto cleaners, a small dry-cleaning shop, operates in a monopolistically competitive market, with revenues and costs as shown in the table below.

Profit maximization table for presto cleaners

Price per shirt Qtty per month Total revenue Total cost Marg Revenue Marginal cost

5.00 0 3000

4.50 1000 5000

4.00 2000 6250

3.50 3000 8000

3.00 4000 10300

2.50 5000 15000

a. Fill in the table

b. Draw the graph

c. What is Prestos profit-maximizing or loss-minimizing quantity of output rounded to the nearest 1000 shirts, and what price does it charge?

d. What is Prestos short-run profit or loss?

e. What will happen to Prestos profit or loss in the long run?

c