The graph shows the cost curves, demand curve, and marginal revenue curve of a firm in monopolistic competition. If this firm is maximizing profits, the firm's markup is $ S ALECK 120- 100- 80- 60- 40- 20- 0 Price and cost (dollars per pair) 25 MR ATC D 50 100 125 150 175 200 225 Quantity (pairs of shoes per week) 75 100 12
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- How can a monopolistic competitor tell whether the price it is charging will cause the firm to earn profits or experience losses?Westchesser Gloves is a monopolistically competitive firm that sells leather gloves. a. In the graph below, highlight the area of profit or loss. Price per pair ($) Incorrect 10 9 8 7 3 2 1 0 Average total cost 0 10 20 30 40 50 Pairs of gloves (in thousands) Westchesser's profit/loss: $ Marginal cost 80 Incorrect Demand Marginal revenue 60 70 80 90 100 b. Calculate Westchesser's profit/loss at the profit maximizing price. Profit or lossThe graph below shows cost and revenue curves for a monopolistically competitive firm. Price $2.00 $1.75 $1.50 $1.25 $1.00 $0.75 $0.50 $0.25 0 20 40 60 MR Quantity It will charge a price of $ ATC MC D 80 100 120 140 160 This monopolist's profit-maximizing output level is on the x-axis.] units. [Watch for the scale
- estion 5 оT 16 Westchesser Gloves is a monopolistically competitive firm that sells leather gloves. Use the graph to highlight the area of profit or loss and answer the questions. 10 Average cost Profit or loss Marginal cost 8 7 4 3 Demand 1 Marginal revenue 10 20 30 40 50 60 70 80 90 100 Pairs of gloves (in thousands) Price per pair ($)ls uccess Tips ■ccess Tips NOUT Actumpto Koup the Highest/3 3. Is monopolistic competition efficient? Suppose that a firm produces baseball bats 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 par bat) 80 70 60 20 MO о о 10 20 40 ATC 60 QUANTITY (Thousands of bas) Demand Man Camp Outcome Min Unit Cost Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that optimal quantity. Furthermore, the quantity the firm produces in long-run equilibrium is average total cost. at the the quantity at which…Costs and Revenues (dollars per room) 200 180 160 140 120 ➜ 100 80 60 40- 0 5 10 Market for Monica's Hotel 15 20 25 30 35 Quantity (rooms) 40 D₂ MC ATC MR 45 50 Multiple Choice Question Use the graph of a monopolistically competitive firm above to answer the following question. What is the amount of profit or less Monica will make at the profit maximizing price and quantity? O Profit of $2000 O Profit of $0 O Loss of $2000
- The graph below shows cost and revenue curves for a monopolistic competitor producing different amounts of chairs. On the graph, suppose that: A = $55, B = $21, C = $15, E = $7, F = 13, and G = 31 Price BL BCE CP MC ATC EH MR F G Quantity Calculate the maximum profit the firm can earn. Competitors in monopolistic competition have full control over- (A) The price of their product (B) Product quality (C) The shape of the market demand curve (D) The elasticity of product substitutions 8AMCost 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
- The following graph shows the daily demand curve for bippitybops in Detroit. Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph. PRICE (Dollars per bippitybop) OTAL REVENUE (Dollars) 2400 1600 100 90 1200 80 1000 70 800 60 50 40 30 20 2200 + 10 2000 + 1800 + 0 1400 + Calculate the daily total revenue when the market price is $90, $80, $70, $60, $50, $40, $30, and $20 per bippitybop. Then, use the green point (triangle symbol) to plot the daily total revenue against quantity corresponding to these market prices on the following graph. (?) 0 ** B Demand 80 10 20 30 40 50 60 70 QUANTITY (Bippitybops per day) 90 100 Total Revenue A ? Total Revenuees Mailings Review View Help a v v Po E-E-FEAT 也。 Paragraph rrice and cost Jaollars per uni 80 60 40 20 ity: Investigate V D 0 20 40 60 80 100 Quantity (units per week) 27) Refer to Figure 13.2.2. To maximize economic profit, this firm in monopolistic competition charges a price of ? 28) Refer to Figure 13.2.2. To maximize economic profit, this firm in monopolistic competition produces an output of? 29) Refer to Figure 13.2.2. This firm in monopolistic competition A) is incurring an economic loss. B) is in long-run equilibrium. C) is making an economic profit. D) must raise its price to maximize economic profit. E) will make more economic profit in the long run. (DELL) O O J MR MC Normal ATC No Spacing Styles Heading 1K Suppose the figure to the right represents the market for a particular brand of shampoo, such as L'Oreal, Lancome, or Maybelline. Assume the market is monopolistically competitive. What is the firm's profit-maximizing price and quantity? thousand per bottle. (Enter your The monopolistically competitive firm's profit-maximizing quantity is bottles of shampoo, and its profit-maximizing price is $ responses as integers.) Price and cost (per bottle) ♫ 3.00- MC 2.80- ATC 2.60- 2.40- 2.20- 2.00- 1.80- 1.60- 1.40- 1.20- 1.00- 0.80- 0.60- 0.40- 0.20- 0.00+ 0 MR 2 4 6 8 10 12 14 16 18 20 22 24 Quantity (shampoo bottles in thousands)
