Question

Now let’s consider our bar in the long-run if the town removes the need for service establishments to have a liquor license in order to serve alcoholic beverages. In the longrun, this moves the alcohol service industry into monopolist competition. Graph long-run equilibrium in this monopolistically competitive market. (You do not need to precisely calculate the locations of the curves, but you need to get the general picture correct.) Be sure to identify the average cost curve, marginal cost curve, demand curve, and marginal revenue curve. Also, identify the profit maximizing output and price and any resulting profits.

Answer 1