Christine is the general manager of a local automated car wash. The market she operates in is perfectly competitive. All of her competitors in the area charge $7 per car wash, which is also her marginal cost per wash. a. If Christine sets her price at $8, her profits will __________ (increase, decrease, or remain the same ) . b. If Christine sets her price to $5, her profits will _____________ (increase, decrease, or remain the same ) . c. Christine’s profit-maximizing price is ________ ($5,$7,$8) the words between the parenthesis are the possible answers

Christine is the general manager of a local automated car wash. The market she operates in is perfectly competitive. All of her competitors in the area charge $7 per car wash, which is also her marginal cost per wash. a. If Christine sets her price at $8, her profits will ____ (increase, decrease, or remain the same ) . b. If Christine sets her price to $5, her profits will _ (increase, decrease, or remain the same ) . c. Christine’s profit-maximizing price is __ ($5,$7,$8) the words between the parenthesis are the possible answers

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter26: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 5E

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Christine is the general manager of a local automated car wash. The market she operates in is perfectly competitive. All of her competitors in the area charge $7 per car wash, which is also her marginal cost per wash. a. If Christine sets her price at $8, her profits will Which one? Decrease Remain the same increase . b. If Christine sets her price to $5, her profits will Which one? Decrease Increase Remain the same . c. Christine’s profit maximizing price is Which one? $5 $7 $8 .
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