# El Dorado Star

Please make sure scholarly sources are used and in text citation are properly used.(mim3) I will be uploading a unit 5 /6 live scribe , a word document with questions and graph again and unit 6 podcast. Question 3 should be referring back to Question #2. You just need to report the profit that is earned at the optimum level of output.There will not be a Livescribe for Unit 6 because the material is so similar to Unit 5. I want to give you a couple of hints that distinguish perfect competition from monopoly.Please explain work as expressed in the questions and don’t forget spreadsheets.

1. Note that a monopolist will produce where MR=MC. Unlike a competitive firm, the monopolist does not have to set P=MR.
2. The shut-down rule will be the same for the monopolist as it was for a competitive firm.

The El Dorado Star is the only newspaper in El Dorado, New Mexico. Certainly, the Star competes with The Wall Street Journal, USA Today, and the New York Times for national news reporting, but the Star offers readers stories of local interest, such as local news, weather, high-school sporting events, and so on. The El Dorado Star faces the revenue and cost schedules shown in the spreadsheet that follows:

A template for the spreadsheet is provided in the Course Materials. Since we are using dollars and cents, be sure to go out two decimal places on your calculations. Add columns to show, respectively, marginal cost (MC), marginal revenue (MR), and total profit.

Place your completed spreadsheet in the Drop Box, and use it to answer the following questions. Your spreadsheet is worth 15 points.

Your spreadsheet must include formulas showing how you arrived at the calculations. As an alternative, you may also submit a document showing your step-by-step calculations for each of the cells. You will not receive credit if you do not show your work using one of these two methods.

 Number of newspapers per day (Q) Total revenue (including advertising revenues) per day (TR) Total cost per day (TC) 0 0 3800 1000 3500 3900 2000 4500 4000 3000 5000 4160 4000 5250 4320 5000 5450 4500 6000 5625 4690 7000 5725 4890 8000 5625 5110 9000 5475 5350
1. What is the value of MR and MC when Q = 8,000?
2. How many papers should the manager of the El Dorado Star print and sell daily? Explain your choice in at least 100 words.
3. How much profit (or loss) will the Star earn at the level of output you chose in #3?
4. At the profit-maximizing output level you reported in question 3, is the El Dorado Star making the greatest possible amount of TOTAL REVENUE? Explain in at least 100 words why or why not.
5. What is total fixed cost for Star? Explain how you found this result.
6. Suppose Star’s total fixed costs were to DOUBLE for some reason. Create a second spreadsheet to show this change.

Should the Star shut down or continue to produce in the short-run? If they should continue to produce, how many papers should they produce? Explain your result in at least 100 words. Be sure to include total profit in your explanation.

[promo2]