We did this one in class. Bottled water market. Social Welfare 5062.5 4515.62 12. This one is straight out of the textbook. Great Lake paper mills.
Total cost is just average cost times the number of plants.
And marginal cost is the change in total costs as additional plants come on line. The 11 th mill would lose money. The profit-maximizing number of mills is 5 in total. Thus industry profits fall as entry proceeds beyond five plants. MSC to find the socially optimal output level.