Refer back to the cost calculations from your Module 4 assignment (the original calculations with the $30 fixed costs). Your cookies are sold in a perfectly competitive market with a market price of $5 per dozen.
- Calculate the profit-maximizing quantity of dozens of cookies for your cookies.
- Calculate the level of profit earned at that level of production.
- Now repeat the previous steps but with the $15 fixed costs calculations.
- Compare the results.
Now assume you have a monopoly with your cookies with the following demand curve: $10 per dozen for one dozen, $9 per dozen for two dozen, $8 per dozen for three dozen, $7 per dozen for four dozen, $6 per dozen for five dozen, $5 per dozen for six dozen, $4 per dozen for seven dozen, $3 per dozen for eight dozen, $2 per dozen for nine dozen, and $1 per dozen for ten dozen. Start with the costs calculated with the $30 fixed costs.
- Calculate the profit-maximizing quantity of dozens of cookies for your cookies.
- Calculate the level of profit earned at that level of production.
- Now repeat the previous steps but with the $15 fixed costs calculations.
- Compare the monopoly results.
Bring all your results together.
- Compare the perfect competition and monopoly results.
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