Part 2: Monopolistic Competition (Sections 9.2, 10.1) 1 Price and cost (dollars per room) 100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0 100 200 300 400 500 Quantity (rooms per day) Figure 3.1 A Motel Business in Monopolistic Competition The above figure represents a motel business in a market of monopolistic competition. The graph shows the quantity demanded for a single-bedroom at different pricing. It also provides the information of the marginal revenue, the average total cost, and the marginal cost. a. {1 point) How many rooms per day will the maotel make the highest profit? b. (1 point) What price can the motel charge at this guantity demanded? c. (2 points) Calculate the total revenue and total cost at this profit-maximizing quantity. d. {1 point) How much is the total profit per day the motel can make? {Box will expand as you type) Part 3: Identify Monopolistic Competition and Oligopoly: Four-Firms Concentration Ratio and HHI (Section 10.1 and 11.1) Questions 1 and 2 are matching learning objectives of section 11.1 Identifying Monopolistic Competition and Oligopoly by finding 4-Firms Concentration Ratio and the Herfindahl Hirshman 4 Index. Question 3 is matching learning objectives of section 10.1 Identifying Monopolistic Competition. Firm Revenue (millions of dollars) 1. The above table shows the revenues of the four largest firms in an industry. There are other smaller firms that are not listed in the table. The total revenue of all the firms in the industry is $80 million. The firms are selling similar but slightly different products from one another. a. (2 points) Calculate the four-firm concentration ratio of this industry. b. (1 point) Considering the four-firm concentration ratio and the characteristics of the industry, which market structure does it most likely represent? (Box will expand as you type) 2. (2 points) An industry has only four firms, who have market shares of 62 percent, 15 percent, 15 percent, and 8 percent. Calculate the Herfindahl-Hirschman Index for this industry. Which market structure does it most likely represent? (Box will expand as you type) 3. (3 points) Based on the characteristics of monopolistic competition in sections 10.1, provide a real-world example of monopolistic competition in your community. Describe the products and firms. What characteristics does the market exhibit that make it a monopolistic competition? (Box will expand as you type)