What do economists mean when they say that competitive markets are more efficient than monopolistic markets? Monopolistic markets result in lower price and higher production Competitive markets result in lower prices, monopolistic market result in higher production Competitive markets result in lower costs, lower prices, and higher levels of production Easy entry and exit
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- Why is a competitive market generally better for society than a monopolistic market?if a monopolistic firm takes over a perfectly competitive market we would expect to see the market price of the good to? fall because demand is perfectly elastic rise and quantity sold to fall fall as the monopolist tries to increase sales rise and quantity sold to increaseUsing only things found in an average home, please provide one example of something from each kind of market, and briefly explain why this thing is in that particular market. Try to be creative. You will need an example of something from a: Perfectly competitive market Imperfectly competitive market (monopolistically competition or oligopoly), and Monopoly market
- The following graph represents a monopolistically competitive firm in long-run equilibrium. Place the black point (cross sign) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Next, place the grey star on the graph to indicate the point where the LRAC reaches a minimum. PRICE PER UNIT (Dollars) 500 450 400 350 300 250 200 150 100 50 MC 0 0 50 LRAC MR Demand 100 150 200 250 300 350 400 450 500 QUANTITY (Units) Monopolistically Competitive Outcome Minimum of the LRAC The long-run equilibrium price is $ (Hint: Use the graph to find the numeric value of the price at equilibrium.) The long-run equilibrium quantity is units. The LRAC curve is at its minimum at a quantity of The long-run equilibrium price is units. the marginal cost of producing the equilibrium output. ?3. 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 (Dollars per scooter) 500 450 400 350 300 250 200 150 100 50 0 MC 0 50 100 ATC Demand 150 200 250 300 350 400 450 500 QUANTITY (Scooters) MR Monopolistically Competitive Outcome Given the profit-maximizing choice of output and price, Citrus Scooters is earning Profit or Loss sellers in the industry relative to the long-run equilibrium amount. Now consider the long run in which scooter manufacturers are free to…What are the most important differences between perfectly competitive markets and monopolistically competitive markets? Give two examples of products sold in perfectly competitive markets and two examples of products sold in monopolistically competitive markets.
- In which type of market, monopolistic or competitive market, is the equilibrium market price lower? Why?The following table shows the daily cost data and demand schedule for a typical firm producing board games in a monopolistically competitive market in the short run. Fill in the values in the Marginal Cost, Total Revenue, and Marginal Revenue columns in the following table and then answer the questions that follow. Quantity Price (Board games) (Dollars per game) Total Cost Marginal Cost (Dollars) (Dollars) Total Revenue (Dollars) Marginal Revenue (Dollars) Average Total Cost (Dollars) 1 16.00 14.00 10.00 8.00 6.00 4.00 2.00 2 3 4 5 6 7 8 0.50 12 18 21 24 35 48 63 80 Under monopolistic competition, a typical firm will produce Based on your calculations, the firm will Fill in the Average Total Cost column in the previous table. ^^^^^^^ board games at a price of $ Based on your calculations, the level of excess capacity in this monopolistically competitive market is per board game in the short run.In which situation at the following, _______ is the market dominated by only one seller/company? Pure monopoly Monopolistic competition Oligopolistic competition Pure competition Free market
- The following table shows the daily cost data and demand schedule for a typical firm producing board games in a monopolistically competitive market in the short run. Fill in the values in the Marginal Cost, Total Revenue, and Marginal Revenue columns in the following table and then answer the questions that follow. Quantity Price Total Cost Marginal Cost Total Revenue Marginal Revenue Average Total Cost (Board games) (Dollars per game) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) 1 15.00 11 2 13.00 20 3 12.00 27 4 10.00 36 5 7.00 45 6 5.00 60 7 3.00 70 8 1.00 104 Under monopolistic competition, a typical firm will produce _______ board games at a price of $_____ per board game in the short run.In the long run, monopolistically competitive firms produce a level of output such that:Monopolistic competition creates inefficiency because of the Price markups and excess capacity. The graph depicts the situation $100 for a hypothetical monopolistically competitive firm. The 90 curves included in the graph are demand (D), marginal 80 revenue (MR), average total cost (ATC), and marginal cost ATC (MC). Use the graph to find the requested values. 70 60 What is the size of the markup on the price? 50 40 markup: $ 30 What is the size of the excess capacity? 20 MC MR 10 units excess capacity: 20 30 40 50 60 70 80 90 10 100 Quantity