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Suppose there is a single Mexican restaurant in a small town.

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Suppose there is a single Mexican restaurant in a small town. Assume that it cannot price discriminate but maximizes its profit by following the optimal output rule. It serves only burritos.;The graph below shows the marginal cost (labeled MC), average cost (labeled AC), marginal revenue (labeled MR), and market demand (labeled Demand) curves for the restaurant.;Use the red rectangle (cross symbols) to shade the restaurant's total profit, and use the tan rectangle (dash symbols) to shade the restaurant's total cost.;Tool tip: For information on using the graph tool, click the Help button.

 

Paper#27100 | Written in 18-Jul-2015

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