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Question 1 Below, you are provided with the firm-level demand, marginal revenue, and relevant cost curves for Knight Trucks. Knight Rider produces electric pick-up trucks
Question 1 Below, you are provided with the firm-level demand, marginal revenue, and relevant cost curves for Knight Trucks. Knight Rider produces electric pick-up trucks in the monopolistically competitive pick-up truck market. Suppose, initially, that this graph depicts the scenario in which trucks are not traded internationally. S60lk S50k Sl 5300 S200k 510k Quantity of Bectric Tmcks {in thousands) Part (i): Suppose that the United States does not trade electric pick-up trucks internationally. Identify the profit-maximizing number of electric trucks that Knight Rider will sell, as well as the profit- maximizing per-truck price that Knight Rider will charge. Part (ii): Suppose that the United States does not trade electric pick-up trucks internationally, and that Knight Rider produces and sells the quantity that you identified in part {i). How much profit does Knight earn? What does this tell you about whether there is currently an incentive for new firms to enter the domestic electric pick-up truck market, or for existing firms to exit this market
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