Price /Output Equilibrium: JAG.Inc., makes stain resistant carpet using a process that locks PTF (aka Tedlon) into the fibers. During recent years, its unique carpet has successfully exploited a profitable niche in the market. The company’s monopoly position in this market niche is now threatened by a competitor’s announcement of a new device with capabilities similar to those of the JAG product.
As TR=TC, calculate the MR, MC
Output price
0 $30
1 $28
2 $26
3 $24
4 $22
5 $20
A) While JAG still a monopoly position, what is their output , price, and profit at the profit-maximizing activity level?
B) What is the output, price, and profit for this product if a monopolistically competitive equilibrium evolves in this market following the successful introduction of the competitor’s product? (assume similar costs conditions for each firm)