The graph below shows the Chamberlin model. The profit maximization level of output for a monopolistically competitive firm is S D (Short Run) ATC 0000 0 OC. OA. OB. OD. mr A B C D мс Quantity
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- Marginal revenue and marginal cost intersect at point Multiple Choice C. d. a. b.Exercise A.13. Explain and graph the long-run equilibrium of a monopolistic firm and that of a perfectly competitive firm. Compare both situations in terms of the level of production, prices and economic efficiency.Suppose the accompanying graph depicts a monopolistically competitive firm earning positive economic profits. Please shift the curves to show the effects of long-run competition and then place Point A at the price and quantity at which the firm will produce inthe long-run MC ATC MR A Quantity Price and Cost
- Use the following graph for a monopolistically competitive firm in a constant-cost industry to answer the question. P Po 0 This firm is Qo MR MC D ATC QPrice, cost, revenue $100 $90 $80 $70 $60 $50 0 000 MR MC D /AC 0 7000 14000 21000 12000 Dresses per year Refer to the graph shown of a monopolistically competitive firm. In the long run: marginal cost will fall for firms that remain as other firms exit the industry. demand will fall for firms that remain as other firms enter the industry. Odemand will rise for firms that remain as other firms exit the industry. O average total cost will rise for firms that remain as other firms enter the industry.Is it possible for monopolistic firms to make supernormal profit/ positive profit in long run? Provide explanation
- The following graph characterizes a firm in a monopolistically competitive market. ATC 32 24 8 MC Demand MR 12 16 20 24 28 32 2 This show that the firm is In a long run equilibrium. earing zero economic profits. In a short run position. producing 16 units of the good.There are thousands of wheat farmers who produce and sell wheat and there are milons of consumers who use wheat and wheat product I MJAUIUI TUUI Oa monopoliitc Ob oligopolistic Oc perfectly competitive Od monopolistically competitivePlace 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. PRICE (Dolars per kit) 100 8 80 70 50 8 10 0 MO 10 ATC 20 30 O True O False MR 60 70 QUANTITY (Thousands of kits) Demand 40 80 90 100 Mon Comp Outcome Min Unit Cost Because this market is monopolistically competitive, you can tell that it is in long-run equilibrium by the fact that firm. Further, a monopolistically competitive firm's average total cost in long-run equilibrium is True or False: This indicates that there is excess capacity in the market for kits. at the optimal quantity for each the minimum average total cost.
- What does it mean to say that: “A firm operating under perfect competition conditions is a pricetaker"?Why Can't this firm set any price it chooses? What if it operates in a monopolisticallycompetitive market, would it be able to set the price? Why? Give some real life examples tosupport your answer.2. You overheard Mr. John, the newly-hired marketing manager, saying: “I think our company shouldtake advantage of economies of scale by increasing output, thereby spreading out our overheadfixed costs”.Would you agree with this statement? If not, provide a better description for the term“economies of scale”. Explain how they may be achieved by organizations. Highlight what wouldprevent them to occur.3. For many, the principle “marginal revenue equal marginal cost" condition for profit maximizationis rather confusing.Discuss the rationale behind the condition, highlighting how different it is from the break-evenanalysisExplain the profit-maximizing output leveland profitof a monopolistic firm by drawing a graph. What are the advantages of internal economies of scale? Explain them briefly. What is the meaning of ‘acceptable loss’for a perfectly competitive firm ? Draw a graph and explain. How can we increase the Total Revenue of productsby using elasticity? Explain them briefly.Suppose the accompanying graph depicts a monopolistically competitive firm earning positive economic profits. Please shift the асс curves to show the effects of long-run competition and then place Point A at the price and quantity at which the firm will produce in the long-run. MC АТС MR D A Quantity Price and Cost
