6990 85 MC 80 75 70 65 60 55 50 45- 40 35 30 25- 20- 15 10 5 + 5 10 15 20 20 25 AC D MR ४. 30 35 40 45 50 Qty If this market were competitive, this firm must ○ A. monopolistically; produce exactly 10 units; long run. ○ B. perfectly; charge a price of $30; short run. ○ C. monopolistically; charge a price of $63; short run. ○ D. perfectly; produce exactly 20 units; long run. ○ E. none of the above. in the
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- Week #8 Assignment: 2. Sub-subje Monopolistic Competitor What is the profit - maximizing output level? What is the firm's proft - maximizing price? Is this firm productively efficient? Will the firm eam a profit or loss at the profit - maximizing output level? How much is that profit or looss? Based on this information, do you think fims will enter or exit this industry? Why or whynot?PRICE (Dollars per engine) 100 90 80 70 60 40 30 & 2 20 10 MO D 0 10 ATC MR Demand 20 30 40 50 60 70 DO 90 QUANTITY (Thousands of engines) 100 Mon Comp 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, a monopolistically competitive firm's average total cost in long-run equilibrium is average total cost. at the the minimumΣ B. 20 10 50 30 20 PRICE (Dollars per bat) Homework (C (91. 4. 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. 06 Mon Comp Outcome Min Unit CAst 09 40 10 MR Demand pleuwe 09 06 QUANTITY (Thousands of bats) Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that ▼ at the optimal eticall the miair MacBook Pro ACID & 5. R H N command comm
- The 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 scaleTable 1. This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. a. b. Quantity Price C. d. 0 1 2 3 4 5 6 7 8 9 10 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Marginal Cost $45 $40 $35 $30 $35 $40 $45 $60 $100 $180 Average Total Cost Refer to Table 1. What is this firm's profitmaximizing level of output? 0 units of output 3 units of output 4 units of output 5 units of output $80 $64 $52 $44 $40 $40 $52 $64 $80 $1008. The following graph represents a monopolistically competitive firm in the short-run: Price 50 MC 45 + ATÇ 40 35 30 25 D 20 15 + 10 + 5+ MR + 10 20 30 40 50 60 70 80 Buantity a) If this firm is maximizing profit, which quantity will it produce? b) If this firm is maximizing profit, which price will it charge? c) If this firm is maximizing profit, how much profit will it earn? d) What will happen to price, quantity, and profits 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? 133.33Assuming that the monopolistic competitor faces the demand and costs depicted below and finds the profit maximizing level of output, what will be the firm's revenue? 45 40 35 30 25 20 15 10 5 Select one: a. $64 b. $80 c. $120 MC1 d. $0 because the firm will shut down ATC₁ AVC1 MR1 D₁ 1 2 3 4 5 6 7 8 9 хоFigure 16-2 This figure depicts a situation in a monopolistically competitive market. 100 90 80 70 60 50 40 30 20 10 MC MR ATC Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY Refer to Figure 16-2. Assuming the firm is maximizing profit, this firm is operating a. in the short run and earning a positive economic profit. b. in the long run and incurring and economic loss. c. in the short run and breaking even. d. in the long run and earning a positive economic profit..
- 1. How might advertising make market less competitive? How might it make markets more competitive? Give the arguments for and against brand names. 2. You are hired as a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is maximizing profit, is the market in a long-run equilibrium? If not, what will happen to restore long-run equilibrium? a. P < MC, P > ATC b. P > MC, P < ATC c. P = MC, P > ATC d. P > MC, P = ATCWhen monopolistically competitive firms earn ________ profits, other firms ________ the industry in the long run. a. normal; exit b. positive economic; enter c. negative economic; enter d. normal; enterThe graph depicts a monopolistically competitive firm. Assuming the firm's ATC is ATC', the firm's current economic profit (per day) is_____, and its long-run economic profit is _____. Price and cost $40 30 23 20 10 0 $3,000; $0 $1,500; $0 $1,500; $2,500 $4,000; $3,000 MR 150 200 MC ATC ATC AR=D Quantity (per day)