If Pretty Paws Salon were to operate in a large city with 99 other very similar pet grooming salons offering the same service package for cats, what would be the profit-maximizing price and number of services per day for each salon? What would be their maximum individual profit?

What would be the equilibrium price and equilibrium number of services in this market?

What is the efficient number of services, and what is the price at which the efficient number of services could be sold?

To answer the above questions, utilize the Table, which shows the market demand schedule and the total cost incurred by all 100 salons.

Price (dollars per service)	Quantity Demanded (services per day)	Total Revenue (dollars per day)	Marginal Revenue (dollars per service)	Total Cost (dollars per day)	Marginal Cost (dollars per service)	Profit (dollars per day)
130	100			8,500
120	200			12,000
110	400			18,000
100	700			46,000
95	900			65,000

When operating as a monopolist, Pretty Paws Salon has the entire market demand. When operating in a large city, it shares the market demand with 99 other similar firms, each of them operating as a perfectly competitive firm.

First, fill out all the columns in the Table.

Recall how a perfectly competitive firm makes its profit-maximizing decisions and how its supply curve is derived.

Remember that the profit-maximizing number of services belongs to all 100 firms. To find each individual salon's profit and the profit-maximizing number of services, you will divide the market values by 100.

Recall also that the efficient quantity is the one at which the marginal benefit equals the marginal cost and the sum of consumer surplus, and producer surplus is maximized.