ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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explain the relationship between the market
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A monopolistic competition is a type of market in which there are many producers who sell differentiated products (in terms of quality ,branding etc.). For example: Clothing Industry, Restaurant Industry etc.
The main features of Monopolistic competition are:
- There are too many buyers and too many sellers.
- The firms produce differentiated products (in terms of branding, packing,qaulity etc)
- Perfect knowledge to both consumers and producers about the market and technology.
- Freedom of exit and entry to the firms.
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- The monopolistically competitive firm represented in the graph is in: $ $11.40 $10.20 $7.50 0 520 630 MC ATC Firm's Demand MR Quantityarrow_forwardThe accompanying graph depicts average total cost (ATC) marginal cost (MC), marginal revenue (M), and demand (D) 50 facing a monopolistically competitive firm MC 45 Place point A at the firm's profit maximizing price and quantity 40 35 What is the firm's total cost? ATC 30 25 total cost: 20 15 What is the firm's total revenue? 10 5 total revenue: $ MR 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100 Quantity What is the firm's total profit? profit: $ Price and Cost ($)arrow_forwardA small, local restaurant in St. Augustine, FL, serves scrambled eggs for breakfast. The market for breakfast scrambled eggs is monopolistically competitive. The following graph shows the demand, MR, MC, and ATC curve of this local restaurant. Use the graph to answer questions 3 to 7. Price (P) per plate $10 7 5 3 2 0 MC MR 50 80 100 ATC Number of plates of scrambled eggs served per day (Q)arrow_forward
- What are the characteristics of monopolistically competitive markets? If the price of the product in a monopolistically competitive market increases what happens to the number of individual firms in the market and to the level of profit in the long run? Fully explain your answer.arrow_forwardA monopolistically competitive firm faces the following demand curve for its product: Price ($) 10 6. 8. 17. 6. 3 2 1 Quantity 4 6. 8. 10 12 14 16 18 20 Refer to the Table. The firm has total fixed costs of $20 and a constant marginal cost of $9 per unit. How many units will the firm produce? "Don't leave spaces before, after or in between your number.arrow_forwardDefine monopolistic competition. Explain the characteristics of monopolistic competitionarrow_forward
- Provide an example of an industry that is monopolistically competitive. Regarding average total cost at the profit maximizing output, what is the difference between perfect competition and monopolistic competition ?arrow_forwardWhat are the major characteristics of a firm competing under conditions of monopolistic competition?arrow_forwardThe figure below shows the demand curve (DD), the marginal revenue curve (MR), and the cost curves of a monopolistic competitor. Price A 3 MR QE B) Loss incurred by the producer C) Consumer surplus D) Deadweight loss ATC 25) A monopolistically competitive firm A) earns low but positive economic profits B) earns high economic profits C) earns zero economic profits D) incurs losses DD Quantity 24) Refer to the figure above. What does the region ABDC indicate? A) Economic profit MC in the long run.arrow_forward
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