ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- A monopolistically competitive firm that earns an accounting profit in the short run Group of answer choices a. must also earn an economic profit in the short run. b. does not earn enough to earn an economic profit in the short run. c. could earn an economic profit, break even, or suffer an economic loss in the short run. d. could earn an economic profit or break even, but could not suffer an economic loss in the short run.arrow_forwardMacmillan Learning Increasing Returns to Scale and Monopolistic Competition Starting from the long-run trade equilibrium in the monopolistic competition model, as illustrated in the accompanying figure, consider what happens when industry demand D increases. For instance, suppose that this is the market for cars, and lower gasoline prices generate higher demand D. a. Show the resulting shift in the D/NT, d, and mr curves. Assume the price increases to $13. Place point A on the new short-run equilibrium. Price 09876 20 19 18 17 16 15 11 10 9 8 7 6 5 4 3 2 1 0 mr D/NT d A • AC MC 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Quantityarrow_forwardAssuming 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 хоarrow_forward
- Solve the problem. Show work and do not use AIarrow_forwardIf Amazon sells dozens of similar types of pencils at slightly different prices, we might assume the pencil market is _________. Select one: a. an oligopoly. b. a monopolistically competitive market. c. a monopoly. d. a perfectly competitive market.arrow_forwardPTICE and COST $40 30 23 20 10 MC ATC ATC MR AR=D 150 200 Quantity per day 0:13 Question 11 (10 points) (Exhibit: Profit Maximization for a Firm in Monopolistic Competition) Suppose that an innovation reduces a firm's fixed costs and reduces cost from ATC to ATC' Before the innovation reduced the cost, the firm's maximum economic profit was: $0. $30. $750. $4,500.arrow_forward
- The 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)arrow_forwardA fast-food restaurant decides to raise the price of its hamburgers. Assume the firm is in a monopolistically competitive industry. What will happen to the demand for its hamburgers? When the fast-food restaurant raises the price of hamburgers, A. some of its customers will be willing to pay a higher price because this restaurant is close to them. B. none of its customers will be willing to pay the higher price and will stop buying hamburgers. C. all of its customers will be willing to pay a higher price because this restaurant faces no competition. D. all of its customers will be willing to pay the higher price because they prefer this brand of hamburgers . E. none of its customers will be willing to pay the higher price because this restaurant faces competition from other restaurantsarrow_forwardWhich of the following are characteristics of monopolistic competition in the long run A. blocked entry into the market □ B. zero economic profit □ C. full efficiency □ D. lower production than competitive marketsarrow_forward
- 1. If the demand for a good increases at the same time as the supply of the same good decreases, what will happen to the equilibrium price and quantity of the good? Explain. 2. What is the deadweight loss of monopoly? Show the deadweight loss when the monopolist can perfectly price discriminate. 3. What is the point of long run equilibrium of a monopolistically competitive firm. How does it compare to a competitive firm.arrow_forwardA monopolistically competitive firm is operating in the short run at the optimal level of output and is earning negative economic profits. Which of the following must be true? Select one: a. ATC> P> MR = MC. b. ATC= P> MR = MC. c. ATC> P = MR = MC. d. ATC> P> MR > MC.arrow_forwardIn monopolistic competition, a firm has some ability to affect the price for its product because of Select one a. economic profits. b.easy entry and exit. C. many competitors product differentlation.arrow_forward
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