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The graph below shows the demand faced by Runners, a monopolist, which incurs only...

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Accounting

image

The graph below shows the demand faced by Runners, a monopolist, which incurs only fixed costs and therefore has a marginal cost equal to zero.

Note: If necessary round your answers to two decimal places. a) Suppose that a new firm, which also has zero marginal costs, enters this industry and assumes that Runners will continue to produce its current output. Plot the existing firm's marginal revenue line, new firm's marginal revenue line, and new firm's demand line.

b) Before the new firm disrupted Runners' monopoly what was the price Runners charged, and what quantity of output did it produce?

Price = $

0

Output =

0

image

c) What output will the new firm choose to produce, and what will be the new market price, given both firms' output?

New Market Price = $

0

New Firm's Output =

0

image

Marginal Revenue 36 32 28 24 Demand 16 12 4 61218 24 30 36 42 48 54 60 66 72 Units of Output Reset

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