RainAway, Inc., makes polymers used to coat the windshields of car's, planes, and boats that makes them slick enough for rain to slide off without wipers. During recent years, its unique windshield coating product has successfully exploited a small but 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 product with capabilities similar to those of the RailAway product.
A. Complete the following table based on the RainAway product's price, output and costs per year:
|
xCase Output (000)
|
Price
|
Total Revenue ($000)
|
Marginal Revenue ($000)
|
Total Cost ($000)
|
Marginal Cost ($000)
|
|
0
|
$15
|
|
|
$1
|
|
|
1
|
14
|
|
|
13
|
|
|
2
|
13
|
|
|
25
|
|
|
3
|
12
|
|
|
36
|
|
|
4
|
11
|
|
|
44
|
|
|
5
|
10
|
|
|
55
|
|
B. While RailAway still enjoys a monopoly position, what is their output, price, and profit at the profit-maximizing activity level?
C. What are 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 cost "conditions for each firm).