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In Akron, Ohio, the movie market is monopolistically competitive. The
demand function for daily attendance and the long-run average cost
function at the Plaza Movie House are, respectively,
P = 9 – 0.4Q
and
AC = 10 – 0.06Q + 0.0001Q2
(a) Calculate the price that the Plaza Movie House will charge for admission to movies in the long run.
(b) What will be the number of patrons per day at that price?
(c) What is the value of the LAC that the firm will incur?
(d) How much profit will the firm earn?
