Can someone please indicate me how to solve this for me. Please make sure the an

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Can someone please indicate me how to solve this for me. Please make sure the answers are correct and show some work

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E. ask Is the running shoes market in long-run equilibrium? Explain

Figure 1 shows the demand curve for, marginal revenue curve, and cost curves of the and Kool In., a representative producer of running shoes in monopolistic competition What is the profit maximizing level of production? What price does Lite and Kool charge? What is Lite and kool's markup? Explain why lite and kool does or docs not have excess capacity

Explanation / Answer

profit = R-C

at monopolistic market

MR=MC

so ,

at Q =125

MR = MC

so profit will maximize at Q = 125

by eqn of MR which is straight line

MR = -(2/5)*Q + 100

now MR= dR/dQ

so by integrating,

R = (-2/5)*Q^2 + 100Q

R = [(-2/5)Q+100]*Q

R = P*Q

so at Q =125, they will charge

P = (-2/5)*125+100 = 50

P = $50

MArk up = revenue-cost

revenue = 50*125 = 6250

MArk up = 100-50 = 50

d)

because its profit will decrease if it will have excess capacity.

in long run, net profit =0

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