5. How short-run profit or losses induce entry or exit Citrus Scooters is a company that manufactures electric scooters in a monopolistically competitive market. The following graph shows the demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC) for Citrus. Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. PRICE (Depar 500 450 350 300 250 300 150 100 MC 50 50 100 ATC MR Demand 150 200 250 300 350 400 450 500 QUANTITY (Scooters) +- Monopolically Comp Profit or Lasa ▼profit, which means there are Given the profit-maximizing choice of output and price, Citrus Scooters is earning sellers in the industry relative to the long-run equilibrium amount. Now consider the long run in which scooter manufacturers are free to enter and exit the market. Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of scooters on the following graph. PRICE (Dollars per scor QUANTITY (Scooters) Demand -0- Demand Which of the following statements are true for both monopolistically competitive markets and monopoly markets? Check all that apply. Firms are not price takers. Firms can earn positive profit in the long run. Price equals average total cost in the long run. Price is above marginal cost.
5. How short-run profit or losses induce entry or exit Citrus Scooters is a company that manufactures electric scooters in a monopolistically competitive market. The following graph shows the demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC) for Citrus. Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. PRICE (Depar 500 450 350 300 250 300 150 100 MC 50 50 100 ATC MR Demand 150 200 250 300 350 400 450 500 QUANTITY (Scooters) +- Monopolically Comp Profit or Lasa ▼profit, which means there are Given the profit-maximizing choice of output and price, Citrus Scooters is earning sellers in the industry relative to the long-run equilibrium amount. Now consider the long run in which scooter manufacturers are free to enter and exit the market. Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of scooters on the following graph. PRICE (Dollars per scor QUANTITY (Scooters) Demand -0- Demand Which of the following statements are true for both monopolistically competitive markets and monopoly markets? Check all that apply. Firms are not price takers. Firms can earn positive profit in the long run. Price equals average total cost in the long run. Price is above marginal cost.
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 1.2P
Related questions
Question
Transcribed Image Text:5. How short-run profit or losses induce entry or exit
Citrus Scooters is a company that manufactures electric scooters in a monopolistically competitive market. The following graph shows the demand
curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC) for Citrus.
Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive
company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss.
PRICE (Depar
500
450
350
300
250
300
150
100
MC
50
50 100
ATC
MR
Demand
150 200 250 300 350 400 450 500
QUANTITY (Scooters)
+-
Monopolically Comp
Profit or Lasa
▼profit, which means there are
Given the profit-maximizing choice of output and price, Citrus Scooters is earning
sellers in the industry relative to the long-run equilibrium amount.
Now consider the long run in which scooter manufacturers are free to enter and exit the market.
Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of scooters on the following graph.
PRICE (Dollars per scor
QUANTITY (Scooters)
Demand
-0-
Demand
Which of the following statements are true for both monopolistically competitive markets and monopoly markets? Check all that apply.
Firms are not price takers.
Firms can earn positive profit in the long run.
Price equals average total cost in the long run.
Price is above marginal cost.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics
Economics
ISBN:
9781305156050
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning