Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 16, Problem 1PA
Subpart (a):
To determine
Categorizing the markets.
Subpart (b):
To determine
Categorizing the markets.
Subpart (c):
To determine
Categorizing the markets.
Subpart (d):
To determine
Categorizing the markets.
Expert Solution & Answer
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Students have asked these similar questions
Which of these markets is most likely to be identified as monopolistic competition?
Group of answer choices
a. shoes
b. corn
c. gasoline
d. shoes, corn and gasoline are all like monopolistic competition
3 of 7
3. Use the graph below to answer the following questions:
a. Profit maximizing output level_
b. Price charged by the monopolistic competitor_
c. Total Revenue_
d. Total Cost_
e. Variable Cost
f. Fixed Cost_
g. Profit or Loss
h. Number of units the firm should produce in the short run and explain why?
i. Number of units the firm should produce in the long run and explain why?
j.
In the long run, (exit/entry)_ will cause the firm's share of the market to
(increase/decrease). and the firm will (decrease/increase) advertising
k. In the long run the firm's costs will (decrease/increase)
will (increase/decrease)
of the market
5453
4.5
4
3.5
2
40 45 50
MC
MR
until loss is driven to
ATC
and the firm's share
AVC
d = firm's
market share
3. The accompanying graph (bottom of this page) summarizes the demand and
costs for a firm that operates in a monopolistically competitive market.
a. What is the firm's optimal output?
b. What is the firm's optimal price?
c. What are the firm's maximum profits?
d. What adjustments should the manager be anticipating?
$220
210
200
190
180
170
160
150
140
130
120
110
100
90
80
70
60
MC
ATC
50
40
30
20
10
MR.
0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Quantity
4. A firm has $1 million in sales, a Lerner index of 0.65, and a marginal cost of
$35, and competes against 1,000 other firms in its relevant market.
a. What price does this firm charge its customers?
b. By what factor does this firm mark up its price over marginal cost?
c. Do you think this firm enjoys much market power? Explain.
Chapter 16 Solutions
Principles of Microeconomics (MindTap Course List)
Ch. 16.1 - Prob. 1QQCh. 16.2 - Prob. 2QQCh. 16.3 - Prob. 3QQCh. 16 - Prob. 1CQQCh. 16 - Prob. 2CQQCh. 16 - Prob. 3CQQCh. 16 - Prob. 4CQQCh. 16 - Prob. 5CQQCh. 16 - If advertising makes consumers more loyal to...Ch. 16 - Prob. 1QR
Ch. 16 - Prob. 2QRCh. 16 - Prob. 3QRCh. 16 - Prob. 4QRCh. 16 - How might advertising reduce economic well-being?...Ch. 16 - Prob. 6QRCh. 16 - Prob. 7QRCh. 16 - Prob. 1PACh. 16 - Prob. 2PACh. 16 - Prob. 3PACh. 16 - Prob. 4PACh. 16 - Prob. 5PACh. 16 - Prob. 6PACh. 16 - Prob. 7PACh. 16 - Prob. 8PACh. 16 - Prob. 9PACh. 16 - Sleek Sneakers Co. is one of many firms in the...
Knowledge Booster
Similar questions
- How does the presence of monopolistic competition influence product variety and innovation in a market? A. It decreases product variety and stifles innovation due to the lack of competition. B. It increases product variety and encourages innovation as firms seek to differentiate their products. C. It has no significant impact on product variety and innovation. D. It leads to standardization of products and processes, reducing product variety but increasing efficiency.arrow_forward7. The figure shows the monopolistically competitive market for smartphones. Plot the profit-maximizing price and quantity on the graph. Is this producer earning positive or negative profits in the short run? In the long run, will supply or demand for this producer's good be affected? Will economic profits increase or decrease for this producer?arrow_forwardIn which type of market, monopolistic or competitive market, is the equilibrium market price lower? Why?arrow_forward
- Exercise A.7. If you were thinking about getting into the ice cream business, would you try to make an ice cream exactly like the (successful) brands that already exist? Explain your decision using the ideas about monopolistic competitionarrow_forwardSuppose, Pfizer Company is the only company allowed by the Sultanate government to sell COVID vaccine in Oman. According to you, what type of market Pfizer Company is having in Oman? a. Monopoly market b. Monopolistic market c. Competitive market d. Oligopoly marketarrow_forwardwhy monopolistic competition the food industryarrow_forward
- Which of the following gives the customers better products that are not offered by other competitors? Select one: a. Competitive advantage b. Branding c. Advertisements d. Marketing Strategyarrow_forwardWhich of the following statements is true about the difference between monopoly and monopolistic competition? a.Monopolies always earn positive profits b.Monopolistically competitive firms have no barriers to entry or exit c.There is no different between monopoly and monopolistic competition d.Monopolistically competitive firms never earn positive profitsarrow_forward1. How might advertising make market less competitive? How might it make markets more competitive? Give the arguments for and against brand names. 2. You are hired as a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is maximizing profit, is the market in a long-run equilibrium? If not, what will happen to restore long-run equilibrium? a. P < MC, P > ATC b. P > MC, P < ATC c. P = MC, P > ATC d. P > MC, P = ATCarrow_forward
- If 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_forwardList the three key attributes of monopolistic competition. ◆ Draw and explain a diagram to show the long-run equilibrium in a monopolistically competitive market. How does this equilibrium differ from that in a perfectly competitive market?arrow_forwardA. How does the demand curve faced by the firm in monopolistically competitive market differ from the demand curve faced by a firm participating in a purely competitive market? b. How does that impact how the firm sets its price and the quantity the firm produces?arrow_forward
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