Question 7 As competitors enter a monopolistically competitive industry, the incumbent firms' demand curves... Group of answer choices Shift to the left and become less elastic Shift to the right and become less elastic Shift to the left and become more elastic Shift to the right and become more elastic

Question 7 As competitors enter a monopolistically competitive industry, the incumbent firms' demand curves... Group of answer choices Shift to the left and become less elastic Shift to the right and become less elastic Shift to the left and become more elastic Shift to the right and become more elastic

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 1.1P

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How does a monopolistic competitor choose its profit-maximizing quantity of output and price?
● Why do firms operating in a monopolistically competitive industry have the power to raise the prices of their products or services? The competition in the industry is insignificant. The entry barriers in the industry are extremely high. The number of buyers in the industry is small. 0 The firms can differentiate their product offerings.
Exercise A.8. The graph below corresponds to a company operating in a market under conditions of monopolistic competition: € 5 4 3 2 1 CM CMe 20 40 60 90 100 120 Quantity of output a) What is the level of production maximizes the short-term profits of this company? b) What price will the company charge to maximize its profits? c) What benefits does the company obtain in the short term? d) How would advertising affect the curves shown in the graph? Would profits necessarily increase? Reason your answers.
Question 6 A monopolistically competitive industry is characterized by... Group of answer choices many firms selling products that are similar but not identical. many firms selling identical products. a few firms selling products that are similar but not identical. a few firms selling highly different products.
Consider a monopolistically competitive market in which firms are currently earning positive profits. Which of the following best describes the expected market dynamics? Question 7Answer a. Existing firms will exit the market, causing profits to decrease b. New firms will enter the market, causing profits to decrease c. Existing firms will exit the market, causing profits to increase d. New firms will enter the market, causing profits to increase
1. Why do monopolistic firms price their product within a price range where the demand is relatively elastic?
You're the manager of a firm that has constant marginal cost of $6. Fixed cost is zero. The market structure is monopolistically competitive. You're faced with the following demand curve: $12 10 Price 8 6 4 2 0 3 Demand 100 200 300 400 500 600 Quantity Show Transcribed Text a. Determine graphically the profit-maximizing price and output for your firm in the short run. Demonstrate what profit or loss you'll be making. (Please draw a graph) b. What happens in the long run?
Use the following graph for a monopolistically competitive firm to answer the next question. Dollars (5) 22 32 0 10 20 35 45 50 Quantity of Output (Units) This monopolistically competitive firm is earning economic profits in the short run and ATC Multiple Choice will continue to have economic profits in the long run will earn only normal profits in the long run this will cause its demand curve to shift to the right in the long run. this will cause its cost curves to rise in the long run
II. The figure is drawn for a monopolistically competitive firm. PRICE 140 123.33 90 56.67 100 133.33 QUANTITY MC ATC Demand MR Refer to the figure above and explain: A). In order to maximize its profit, how many units the firm will choose to produce? 100 B). When the firm is maximizing its profit, the markup over marginal cost amounts to 50 C). The firm's maximum profit is D). Efficient scale is reached beyond which level of units? 133.33
How does advertising impact monopolistically competitive firms? Group of answer choices 1-It either causes a firm’s perceived demand curve to become more elastic, or advertising causes demand for the firm’s product to increase. 2-It causes a firm’s perceived demand curve to become more inelastic. 3-Advertising expenses drive down average cost of production by increasing demand for the product and in turn increases total revenue. 4-Advertising always causes monopolistically competitive firms to experience lower average costs.
FIGURE 10-1 Price MC ATC AVC D MR Quantity The profit-maximizing firm illustrated in Figure 10-1 operates in a monopolistically competitive industry. Which of the following best explains what happens in the long run? New firms enter the industry and the firm's marginal cost curve shifts up, which leads to a decrease in the firm's O output. New firms want to enter the market but CANNOT since there are barriers to entry in monopolistic competition. The market supply curve shifts right, reducing the equilibrium market price. New firms enter the industry and the firm's demand curve shifts left and becomes more elastic.
Cost and revenue The graph presents the short-run costs and revenue for a monopolistically competitive firm. Use this information to $800 Marginal cost Average total cost determine the profit-maximizing output and profit for this 750 firm in the short run. 700 650 What is the profit-maximizing output of this 600 550 monopolistically competitive firm? Round your answer to 500 the nearest whole number. 450 400 Demand units of output 350 11 300 250 What is the maximum level of profits for this 200 monopolistically competitive firm? Round your answer to 150 the nearest whole number. Marginal revenue 100 50 0 1 2 3 4 5 6 7 8 9 1011 12 13 14 15 16 17 18 19 20 350 Units of output %24