Question
White-teeth is one firm of many in the market for toothpaste, which is in long-run equilibrium. a. Draw a diagram showing White-teeth's demand curve, marginal-revenue
White-teeth is one firm of many in the market for toothpaste, which is in long-run equilibrium.
a. Draw a diagram showing White-teeth's demand curve, marginal-revenue curve, average total-cost curve, and marginal-cost curve. Label White-teeth's profit-maximizing output and price.
b. What is White-teeth's profit? Explain.
c. On your diagram, show the consumer surplus derived from the purchase of White-teeth toothpaste. Also show the deadweight loss relative to the efficient level of output.
d. If the government forced White-teeth to produce the efficient level of output, what would happen to the firm? What would happen to White-teeth's customers?
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