4. Is monopolistic competition efficient? Suppose that a firm produces wooden train engines in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. (?) PRICE (Dollars per engine) 100 90 80 70 60 50 40 --- 30 20 10 0 MO 0 I 1 I I 10 20 30 ATC 1 I MR Demand 40 50 60 70 80 90 100 Mon Comp Outcome Min Unit Cost

4. Is monopolistic competition efficient? Suppose that a firm produces wooden train engines in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. (?) PRICE (Dollars per engine) 100 90 80 70 60 50 40 --- 30 20 10 0 MO 0 I 1 I I 10 20 30 ATC 1 I MR Demand 40 50 60 70 80 90 100 Mon Comp Outcome Min Unit Cost

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter14: Monopolistic Competition And Product Differentiation

Section: Chapter Questions

Problem 7P

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Similar questions

(CH 16) 4. Is monopolistic competition efficient? Suppose that a firm produces wool jackets in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. 100 90 Mon Comp Outcome 80 70 Min Unit Cost ATC PRICE (Dollars per jacket) 50 40 20 10 0 0 MC 10 MR 20 30 40 50 60 70 80 QUANTITY (Thousands of jackets) Demand 90 100
Economics Question
Which of the following is shared by both monopolistically competitive markets and prefectly competitive markets?
From the following graph, show the equilibriums under each scenario. Market is in equilibrium at A under competitive market. (a) Show the equilibrium under monopoly. Call this point B (b) When the demand increased in the area due to immigration, show the new competitive equilibrium, call this point C. (c) Show the new monopolistic equilibrium with increased demand and call this point D.
Suppose the market for kitchen knives is monopolistically competitive and that businesses in this market are currently earning negative economic profits. In the long run, the demand for an individual kitchen knife business will ______ as more kitchen knife businesses leave the market, which will cause economic profits to ______ .
Suppose that in the short run the firms in a monopolistically competitive industry are making an economic profit. what is likely to happen in this market over the long run? Will the firms be able to sustain this economic profit over the long run? Describe the adjustment process in this market towards the long run equilibrium in detail.
In the long run, monopolistically competitive firms produce a level of output such that:
In a long-run equilibrium, would a perfectly competitive firm and a monopolistically competitive firm produce at the level of output that minimizes the average total cost? Explain with diagrams. Explain whether a monopolistically competitive firm is able to achieve social efficiency in the long-run equilibrium through the diagram you produced above.
Suppose,initially there is a positive profit obtained by a firm in monopolistic competition.Explain how the adjustment to the long-run equilibrium will take place in the monopolistic competitive market.why will there be excess capacity in the long-run equilibrium in this scenario?Provide adequate graph to supplement your answer.
Although the long run equilibrium of a monopolistically competitive markets involves zero economic profit likeperfect competition, the outcome is deemed to be inefficient. Why is that the case? Are there desirablecharacteristics of monopolistic competition that potentially balance some of the inefficiencies?
The following graph represents a monopolistically competitive firm in long-run equilibrium. Place the black point (cross sign) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Next, place the grey star on the graph to indicate the point where the LRAC reaches a minimum. PRICE PER UNIT (Dollars) 500 450 400 350 300 250 200 150 100 50 MC 0 0 50 LRAC MR Demand 100 150 200 250 300 350 400 450 500 QUANTITY (Units) Monopolistically Competitive Outcome Minimum of the LRAC The long-run equilibrium price is $ (Hint: Use the graph to find the numeric value of the price at equilibrium.) The long-run equilibrium quantity is units. The LRAC curve is at its minimum at a quantity of The long-run equilibrium price is units. the marginal cost of producing the equilibrium output. ?
How do perfectly competitive firms, monopolists, monopolistically competitive firms, and cartels choose the profit -maximizing quantity? A) The quantity at which average total cost is minimizedB) The quantity at which total revenue and total cost are equalC) The quantity at which total revenue is maximizedD) The quantity at which marginal revenue and marginal cost are equal