Suppose that fixed costs for a firm in the monopolistically competitive automobile industry ard $50 and that variable costs are equal to $50 per finished automobile ( marginal cost= $50). Because more firms increase competition in the market, the market price falls as more firms enter an automobile market, or specifically, P 50 + (20/n), where n represents the number of firms in a market. Assume the size of the U.S. industry is 1000. Use the internal economies of scalo theory to: %3D (a) Calculate the equilibrum number of firms in the US without trade?

Suppose that fixed costs for a firm in the monopolistically competitive automobile industry ard $50 and that variable costs are equal to $50 per finished automobile ( marginal cost= $50). Because more firms increase competition in the market, the market price falls as more firms enter an automobile market, or specifically, P 50 + (20/n), where n represents the number of firms in a market. Assume the size of the U.S. industry is 1000. Use the internal economies of scalo theory to: %3D (a) Calculate the equilibrum number of firms in the US without trade?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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how do I solve A, B, C? 1. Suppose that fixed costs for a firm in the monopolistically competitive automobile industry are $50 and that variable costs are equal to $50 per finished automobile ( marginal cost $50). Because more firms increase competition in the market, the market price falls as more firms enter an automobile market, or specifically, P 50+ (20/n), wheren represents the number of firms in a market. Assume the size of the U.S. industry is 1000. Use the internal economies of scale theory to: (a) Calculate the equilibrum number of firms in the US without trade? (b) What is the equilbrium price of automobiles in the United States in autarky? (c) What is the equilibrium output per firm in the US in autarky?
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When we compare the long run conditions of a Perfectly Competitive firm to the long run conditions of a Monopolistically Competitive firm we see that the Perfectly Competitive firm is less productive and cost efficient than the Monopolistically Competitive firm more productively efficient and less cost efficient than the Monopolistically Competitive firm less productively efficient and more cost efficient than the Monopolistically Competitive firm more productive and cost efficient than the Monopolistically Competitive firm
Economics Question
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encient? Suppose that a company operates in the monopolistically competitive market for electric razors. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm. 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. 3; 100 50 90 80 88 + 70 70 60 550 40 PRICE (Dollars per razor) 30 30 10 MC 20 20 0 10 10 ATC +. ? Mon Comp Outcome MR Demand 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of razors) Min Unit Cost
You are a producer in a monopolistically competitive market of a good that is seen as being critical in the fight against the coronavirus (use hand sanitizer as an example), assume prior to the virus outbreak you had been producing a quantity that equated MR to MC and thereby allowed you to optimize your profitability. Further assume the price you are authorized to sell the product for has now been frozen by government order, and you have been mandated by government order to increase the quantity of the product you must produce to service the spike in market demand. Explain what you believe will happen to the profitability of this firm including in your answer what will happen to MC as your output expands and to your MR as price is forced to remain constant.