In the long run, a monopolistically competitive firm Multiple Choice ● earns an economic profit. O O O produces where P= ATC. achieves allocative efficiency. produces where MR exceeds MC.
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- $100 $90 MC АТС $80 $70 $60 $50 $40 $30 Demand = P $20 $10 MR $0 10 20 30 40 50 60 Output (Q) The firm shown in the diagram above is in long run equilibrium in a monopolistically competitive market. According to the graph, the Markup is Select one: а. $50 O b. $30 O c. $40 O d. $60DE Quantity MC MR ATC Demand The graph above represents a firm in a monopolistically competitive market. Which of the following is true? The firm's profit-maximizing quantity is E. The firm is making a profit of (A - B) x D. The firm is making zero economic profits. The firm is making a loss of (A - B) x D.Please dont copy and paste the answers One of your former peers starts up a firm after graduating NYUAD. However, he didn’t take Markets so is unsure if he is behaving optimally. He’s asked you for help. His firm faces monopolistic competition, has diminishing returns to its inputs and uses a fixed input. He is producing at a quantity such that P=MC, and he makes a positive profit. a. Draw the Demand curve, MR, MC, and ATC reflecting this situation on a graph. Label the quantity, price and profit of the firm under his strategy. b. Is his strategy maximizing his profits? Explain how he would do so if not. Label the quantity, price and profit of the firm under the optimal strategy on your graph in part a. c. He asks you about what you predict might happen to his profits in the future. What do you expect will happen to profits in this industry as we go to long run and why? What is the key assumption of monopolistic competition that gives you your conclusion?
- The profit-maximizing firm illustrated in Figure operates in a monopolistically competitive industry. Which of the following best explains what happens in the long run? Price 4 O MC ATC AVC D MR QuantityThe graph below shows the Chamberlin model. The profit maximization level of output for a monopolistically competitive firm is S D (Short Run) ATC 0000 0 OC. OA. OB. OD. mr A B C D мс QuantityATC MR 10 20 Quantity of Output (Units) 35 45 50 Refer to the above graph. At the profit-maximizing level of short-run output, this monopolistically competitive firm will: Oa. achieve both allocative (p = me) and productive efficiency (p = min. ATC). Ob. achieve allocative (p- me), however, not productive efficiency (p = min. ATC). Oc not achieve allocative (p- me)however, achieve productive efficiency (p min. ATC). Od. not achieve either allocative (pme) and productive efficieney (n=min AT (s) smpoa
- In the long run, the economic profits for a monopolistically competitive firm will beTRUE OR FALSE IN LONG RUN EQUILIBIRUM A MONPOLISTIC COMPETITIVE FIRM WILL MOST LIKELY PRODUCE A LEVEL OF PURPUR FOR WHICH ORICE EQUALS AVERAGE TORAL COSTA monopolistically competitive firm can earn positive profit both in the short run and in the long run as its product is different from its competitors'. O True False
- 33 $100 $90 MC АТС $80 E of $70 $60 $50 $40 $30 Demand = P $20 $10 MR $0 10 20 30 40 50 60 Output (Q) The firm shown in the diagram above is in long run equilibrium in a monopolistically competitive market. According to the graph, the Markup is Select one: а. $40 b. $60 с. $50 d. $30Study Tools ins ess Tips ss Tips PRICE (Dellars per engine) 288 RSS #RR 100 50 30 20 10 MO 0 0 10 ATC MR Demand 20 30 40 50 70 DO 90 QUANTITY (Thousands of engines) 100 Mon Comp Outcome Min Unt Cost Decause this market is a monopolistically competitive market, you can tell that it is in long-run equilibrum by the fact that optimal quantity. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is average total cost. at the the minimumExercise A.13. Explain and graph the long-run equilibrium of a monopolistic firm and that of a perfectly competitive firm. Compare both situations in terms of the level of production, prices and economic efficiency.