The graph shows the demand curve, marginal revenue curve, and marginal cost curv

Question

The graph shows the demand curve, marginal revenue curve, and marginal cost curve of Lite and Kool, Inc., a producer of running shoes in monopolistic competition. Draw a point at the firm's the profit-maximizing price and quantity. Label it 1. Draw an arrow that shows Lite and Kool's markup. Draw the average total cost curve such that Lite and Kool does not have excess capacity. Label it. Draw a point at the intersection of the ATC curve and the MC curve. Label it 2. Lite and Kool's markup is $ a pair.

Explanation / Answer

Markup is $20. (i.e. 80 - 60)

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