Suppose that Fruitship continues to operate but faces more and more competition over time.
Adjust the following graph to show the effect of a continuing competition. Then, use the black points (cross symbols) to plot the new marginal revenue
curve. Use the grey point (star symbol) to indicate the new profit-maximizing quantity of output and the blue point (circle symbol) to indicate the new
price Fruitship will charge.
PRICE (Dolars per frut smoothie)
°
2
ATC
Demand
MR
10 12
14
QUANTITY (Fruit smoothies per hour)
20
Demand
+
New Marginal Revenue
*
New profit-maximizing quantity
°.
New price