Suppose price exceeds average total cost for a monopolistically competitive firm. The firm should definitely Question 3 options: a) should increase output b) experience short run economic profits c) should decrease output d) should raise its price

Introduction ; In monopolistic competitive firm, there are many buyers and sellers with some control…

Answered: uppose price exceeds average total cost…

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter9: Monopolistic Competition And Oligoply

Section: Chapter Questions

Problem 8SQ

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Similar questions

a) Can the threat of a price war deter entry by potential competitors? What actions might a firm take to make this threat credible? b)Why is the firm’s demand curve flatter than the total market demand curve in monopolistic competition? Suppose a monopolistically competitive firm is making a profit in the short run. What will happen to its demand curve in the long run?
Consider the long-run equilibrium in a monopolistically competitive market. Which of the following alternatives is correct? (a) Price is equal to marginal cost (b) The equilibrium is cost-efficient: Firms produce at the minimum of the average cost curve (c) The equilibrium is welfare-efficient: There is no deadweight loss (d) There are no barriers to entry: Every firm earns zero profits
What is one difference between a firm in a perfectly competitive industry and a firm in a monopolistically competitive industry? A) A monopolistically competitive firm does not face entry from other firms. B) A monopolistically competitive industry does not have a large number of sellers. C) A monopolistically competitive firm does not choose a level of output where marginal cost is equal to marginal revenue. D) A monopolistically competitive firm does not have the exact same product as other firms.
Suppose the monopolistically competitive firm is charging a price equal to average total cost. The the monopolistically competitive firm should Question 4 options: a) increase its output b) decrease its output c) is operating in the long run d) can expect new firms to enter
A monopolistically competitive firm faces the following demand schedule for its product: The firm has total fixed costs of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with A)30 units of output. B)15 units of output. C)21 units of output. D)9 units of output. E)12 units of output.
Consider a monopolistically competitive industry where firms differ in productivity levels. When the industry opens to international trade, transportation and other transaction costs may determine which firms will remain exclusively in the local market and which firms will become exporters.a) True or False?b) Explain with the support of a graph.
If the typical firm in a monopolistically competitive industry is in the situation Q as depicted in the figure, it should expect V in the number of Monopolistically Competitive Firm firms in its market and V in the demand for its brand. MC SRATC D MR Output Price ($)

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