Suppose that the market for chicken momos is perfectly competitive with ten firms producing momos. Tasty treat is one of the ten price-takers in the market for momos. The accompanying tables show the demand schedule for momos in Dhaka and cost schedule for "Tasty Treat".DEMAND SCHEDULEPrice (BDT per plate)Quantity demanded (plate per hour)1090025675306004045050300700COST SCHEDULE OF TASTY TREATOutput (plate per hour)Marginal Cost (BDT per extra plate)Average Variable Cost (BDT per plate)Average total cost (BDT per plate)402025905010107560302055705023508070356090855077a) What is the value of the shut-down price and break-even price for Tasty Treat?How did you figure that out?b) Write down the individual supply schedule of chicken momos for Tasty Treat and the industry supply schedule for chicken momos.c) Plot the market demand and supply curves for chicken momos and find the equilibrium price and equilibrium quantity.d) Calculate the profit/loss that Tasty Treat makes at the current equilibrium price?

A perfectly competitive market consists of a large number of buyers and sellers and each seller…

Answered: Suppose that the market for chicken…

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Firms In Competitive Markets

Section: Chapter Questions

Problem 10PA

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Suppose that the market for chicken momos is perfectly competitive with ten firms producing momos. Tasty treat is one of the ten price-takers in the market for momos.
The accompanying tables show the demand schedule for momos in Dhaka and cost schedule for "Tasty Treat".

DEMAND SCHEDULE

Price (BDT per plate)	Quantity demanded (plate per hour)
10	900
25	675
30	600
40	450
50	300
70	0

COST SCHEDULE OF TASTY TREAT

Output (plate per hour)	Marginal Cost (BDT per extra plate)	Average Variable Cost (BDT per plate)	Average total cost (BDT per plate)
40	20	25	90
50	10	10	75
60	30	20	55
70	50	23	50
80	70	35	60
90	85	50	77

a) What is the value of the shut-down price and break-even price for Tasty Treat?
How did you figure that out?
b) Write down the individual supply schedule of chicken momos for Tasty Treat and
the industry supply schedule for chicken momos.
c) Plot the market demand and supply curves for chicken momos and find the
equilibrium price and equilibrium quantity.
d) Calculate the profit/loss that Tasty Treat makes at the current equilibrium price?

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