Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter 10, Problem 4SQ
To determine
The production of the monopolistically competitive firm in the long run.
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Answer the question:
Aside from advertising, how can monopolistically competitive firms increase demand for their products? What effect would doing this have on the elasticity of the firm’s perceived demand curve? Explain your answers.
Q4. Monopolistic market structure is characterized by large number of buyers and seller
selling close substitute, product differentiation, selling cost, If the firms in a monopolistically
competitive market are earning economic profits or losses in the short run, would you expect
them to continue doing so in the long run? Why?
Fresh Taste, Inc. produces organic breakfast cereals. The market for breakfast cereals is monopolistically competitive. The figure above shows the demand curve that Fresh Taste faces (D), the company's marginal revenue curve (MR), its marginal cost curve (MC), and its average total cost curve (ATC). Fresh Taste's excess capacity is
a. 4,000 boxes per day.
b. zero.
c. 12,000 boxes per day.
d. 8,000 boxes per day.
Chapter 10 Solutions
Micro Economics For Today
Ch. 10.1 - Prob. 1YTECh. 10.5 - Prob. 1GECh. 10.6 - Prob. 1YTECh. 10 - Prob. 1SQPCh. 10 - Prob. 2SQPCh. 10 - Prob. 3SQPCh. 10 - Prob. 4SQPCh. 10 - Prob. 5SQPCh. 10 - Prob. 6SQPCh. 10 - Prob. 7SQP
Ch. 10 - Prob. 8SQPCh. 10 - Prob. 9SQPCh. 10 - Prob. 10SQPCh. 10 - Prob. 11SQPCh. 10 - Prob. 12SQPCh. 10 - Prob. 13SQPCh. 10 - Prob. 1SQCh. 10 - Prob. 2SQCh. 10 - Prob. 3SQCh. 10 - Prob. 4SQCh. 10 - Prob. 5SQCh. 10 - Prob. 6SQCh. 10 - Prob. 7SQCh. 10 - Prob. 8SQCh. 10 - Prob. 9SQCh. 10 - An oligopoly is a market structure in which a. one...Ch. 10 - Prob. 11SQCh. 10 - A common characteristic of oligopolies is a....Ch. 10 - Prob. 13SQCh. 10 - Prob. 14SQCh. 10 - Prob. 15SQCh. 10 - Prob. 16SQCh. 10 - Prob. 17SQCh. 10 - Prob. 18SQCh. 10 - Prob. 19SQCh. 10 - The kinked oligopoly demand curve is a result of...
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- Which of the following is always associated with monopolistic competition? a. highly inelastic demand curves b. low barriers to entry c. demand curve that lies below the marginal revenue curve d. indistinguishable products e. economic profits in the long runarrow_forwardMonopolistically competitive firms in a market face the following demand and costs, where P is price, Q is quantity, and N is the number of firms in the market 200 Demand: Q = - P N Total Cost: TC = 8+Q² a. How many units will a firm produce and what price will it charge to maximize profit? b. How much profit will the firm earn? c. How many firms will be in the market in the long run?arrow_forwardList three key attributes of monopolistic competition.Draw and explain a diagram to show the short-run equilibrium in a monopolistically competitive market. How does this equilibrium differ from that in a perfectly competitive marketarrow_forward
- a) draw a graph for monopolistic competition market that is in long run equilibrium marking the price and quantity. Explain why the firm will be at that price and quantity. b) State the conditions that establish the market structure monopolistic competition, and state how the market adjusts to long run equilibrium and what is different about long run equilibrium for this market structure.arrow_forwardWhich of the following is true of a monopolistically competitive firm in long-run equilibrium? Group of answer choices a. It produces where price equals marginal cost, and it earns zero economic profits. b. It produces where marginal cost equals marginal revenue, and the price is equal to average total cost. c. It produces at the minimum average total cost, and it utilizes all excess capacity. d. It produces where marginal revenue exceeds marginal cost, and it earns positive economic profits. e. It produces more than the allocatively efficient quantity, and the price is greater than marginal cost.arrow_forwardProduct differentiation is the main difference between perfect competition and monopolistic competition. Discuss what product differentiation is. Provide an example (and explanation) of a product or service that operates in a monopolistic competition environment. Why do companies try to differentiate their products?arrow_forward
- The adjacent figure shows the demand curve (D), the marginal revenue curve (MR), and the marginal cost curve (MC) for a monopolistically competitive hamburger restaurant. A change in the slope of which of the following curves will affect the profit-maximization rule? ○ A. Marginal cost curve B. Marginal revenue curve C. Demand curve ○ D. None of the above The profit-maximizing price for this restaurant is $ and their profit-maximizing quantity is hamburgers per day. Price and cost ($/hamburger) $8.00- $7.00- $6.00- $5.00- $4.00- $3.00- $2.00- $1.00- $0.00+ 0 200 MC D MR 400 600 800 1,000 1,200 Quantity (hamburgers per day)arrow_forwardThe table is for a monopolistic competitive firm in the short run. What will the firm's profit equal in the long run? Question 1 options: $0 $91 $102 $228arrow_forwardIf a monopolistically competitive firm is earning profits in the short run: Question 34 options: a the entry of competing firms will shift the firm's demand to the right. b the entry of competing firms will shift the firm's demand to the left. c the entry of competing firms will cause price to drop, but not affect the firm's demand curve. d the entry of competing firms will cause price to rise, but not affect the firm's demand curve.arrow_forward
- Give an example of a market that has monopolistic competition and explain how the example you have chosen exhibits competitive aspects and how it also exhibits monopolistic aspects.arrow_forwardWhat are the “monopolistic” and the “competitive” elements of monopolistic competition?Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click twice to empty the box.Similar to a monopoly, a monopolistic competitor: can restrict output to increase price (at least in the short run).checked can make profits or losses in the short run.unanswered faces a downward-sloping demand curve.unanswered faces high barriers to entry.unanswered makes economic profits in the long run.unanswered produces where P > MR = MC.unanswered has one seller.unanswered Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click twice to empty the box.Similar to a perfect competitor, a monopolistic competitor: faces a perfectly elastic demand…arrow_forward
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