ngstion 1 Lucky Bubble is one of the 500 companies in producing bubble tea in Country Happy. The equilibrium price of a cup of bubble tea is $30 and Lucky Bubble has the following cost structure. Quantity Total Cost (Cups per month) ($) 0 12,500 1,000 30,000 1, 500 36,000 2,000 43,000 2, 500 53,000 3,000 68,000 (a) Construct ONE new table based on the above data. Besides including the original columns of quantity, add columns of average total cost, average variable cost and marginal cost of Lucky Bubble. Round your answers to integer, if applicable. Quantity Average Total Average . (CUPS per Cost Variable Cost Marglgal COSt month) (5) l5) (Remarks: Signicant mark deduction applies if the tabie is broken into 2 parts or 2 tables) (6 marks) (b) Determine and explain the prot maximizing output, price and economic profit (loss) of Lucky Bubble. Show your workings. (6 marks) (c) Based on the given data and your answer in part (a) and (b), draw a set of market-rm diagram to illustrate the prot situation of Lucky Bubble. Label the critical points with all relevant figures. Label the area of profit (loss) too. No explanation is needed. (6 marks) (0!) Recently, Lucky Bubble keeps operating in the bad time. After an investigation, the owner recognized that researches indicate nowadays both bubble tea and coffee are favourite beverages of young adults of Country Happy and recently the price of coffee reduced substantially. In the meanwhile, the management fee of the shop paid by Lucky Bubble adjusted upward. Illustrate this new situation of Lucky Bubble in the short run in the same diagram of part (c). Explain the situation of Lucky Bubble briey. (7 marks) 7.3 Output, Price, Profit In The Short Run Short-Run Equilibrium in Bad Times (earn negative economic profit) . With a decrease in market demand, now the new equilibrium price at P3. At the profit-maximizing price (P3), the price taker firm produces q3 at which marginal cost equals marginal revenue. . At this quantity, price (P3) is less than average total cost. TRETC . This firm incurs an economic loss shown by the yellow rectangle. Price & Cost ($) Price Taker Firm Price ($) Market The AVC curve must be drawn. () use the ATC at 93 mc3 and price to calculate S3 AT ( 3 the total loss = ( P-ATC 93 ) X 93 AVG $5. 14 ECONOMIC ( mininum point of Profit $3 p, Loss AT( curve ) MR3 - - -P3 Market Equilibrium = (P- AJC ) x93 @ profit-maximization condition = mc = MR = ($3- $5.14)*7 minimum -> determine the point of profit- maximization = - $14.98 (boss) AVC curve quantity (93) 0 0 Q3 = 70000 quantity (q) Quantity (Q) BHMH 2002, Introduction to Economics 10