4. The table below shows the demand and cost data facing "Velvet Touches" a monopolistically competitive producer of velvet throws pillows. Use the data to answer the following questions ( 4 points)

Q Price TR MR Total Cost Marginal Cost

1 30 32

2 28 43

3 26 53

4 24 64

5 22 76

6 20 90

7 18 106

8 16 126

A) Fill-in the missing values in the table.

B) Refer to the table. The Velvet Touches should produce _____ units to maximize and charge the

price of ________ to maximize profit:

a. 4; $ 24 b. 7, $18 c. 5; $22 d. 3, $26

C) The firm's total profit/loss at the profit maximizing output and price would be: _____

a. ( -$ 25) b. $34 c.$56 d. (-$ 8)

D) What should the firm and other firms in velvet pillows industry expect in the long-run?

1. Some firms will exit the market c. Some firms will shut down
2. New firms will enter the market d. There will be no entry, no exit.

E) In the long-run the firm's demand curve will become ________ elastic and the firm will earn

profit/loss of $_________

a. less; $34 b. more; $0 c. less, $$56 d. more, $10