Tutorial 9 (Ch17) Team A Ch.17 Monopolistic Competition Problems and Applications: 5 and 9 (Textbook) Supplementary Questions: 1 and 2 Supplementary Questions 1. Suppose that Gordano sells fashion clothing in a small town along with a few other fashion retail stores. (a) Draw the marginal cost, average total cost, demand, and marginal revenue curves for the Gordano's retail store, assuming the profit-maximizing price is greater than the average total cost. Show the restaurant's profit. (b) Explain what might happen in this situation to bring about a long-run equilibrium. Would more retail stores open, or would some leave? 2. Suppose a monopolistically competitive industry has 8 firms with identical costs. (a) Given the data in the table below, calculate the long-run price and quantity produced by the typical firm. Q P ATC MC 6.00 11.00 5.50 5.43 1.85 5.00 5.07 2.35 DO W O LAWN - 4.50 4.50 2.80 4.00 1.24 3.20 3.50 4.12 3.50 3.00 4.07 3.82 2.50 30't 4.11 b) Is the industry efficient or not? Draw a graph to illustrate your idea. (c) Would this industry be more efficient if it were competitive