Question
Taco Bell estimates that on the average a store has fixed costs of $100 per day. The fixed costs includes interest payments and rent. Taco
Taco Bell estimates that on the average a store has fixed costs of $100 per day. The fixed costs includes interest payments and rent. Taco Bell also estimates that the marginal cost of a taco is $8. Suppose Taco Bell is a monopoly. Your supervisor wants to know what are the profit- maximizing price for a taco and the profit-maximizing quantity. Your supervisor also wants to know what will be the profit at this price and quantity. (round to nearest integer).Leaving Taco Bell behind, suppose that the market for taco is perfectly competitive, that the market demand is still given by the data in the table to the right, and the marginal cost of a taco is $8. In this case, what is the equilibrium price and equilibrium quantity of taco? Discuss how the competitive equilibrium price and quantity compare to the monopoly profit- maximizing price and quantity.
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