Part 1: Article Analysis- In most cases, the food truck industry is an example of monopolistic competition. Read the article and answer the questions below. "The mobile food industry is just like any other fledgling industry ? it has many success stories, but it also has many stories of failure. To run a food truck, you need to be on the streets six or seven days a week serving lunch and dinner, not to mention the need to be present at any food truck event that pops up. Owning a food truck means working a majority of your waking hours, especially at the start of your business... Because the mobile food industry is seeing huge popularity and expansion, some people think that opening a food truck has become the next get-rich-quick business model. Yes, food trucks can earn a lot of money. However, most of them typically spend almost all they make. Unfortunately, your fixed costs don't change, and your bills come due every month. Your staff still needs to be paid, too. You must load your truck up with food for every shift, so you must pay for your ingredients, fuel, and insurance. Unless you already own your commercial kitchen, you're going to owe rent to your kitchen landlord... You can earn a decent living as a food truck owner only if you intend to work in the truck. Many people think they'll open a food truck and draw a paycheck without actually cooking, managing, or working at the service window." [Excerpts from Running a Food Truck for Dummies]

1. Identify two characteristics that the food truck industry shares with perfectly competitive industries.

2. Identify two characteristics that the food truck industry shares with monopolies or other imperfectly competitive industries.

3. Identify two different strategies that food trucks use to earn more profit than their competitors.

4. Assume that there are few government regulations, explain why food truck owners would likely earn no economic profit in the long run

5. Identify the profit maximizing price and quantity.

6. Calculate the total revenue at the profit maximizing price and quantity.

7. Calculate the profit or loss at the profit maximizing price and quantity.

8. Will the number of firms in the industry increase, decrease, or stay the same in the long run? Explain your answer.

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