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 3PA
Subpart (a):
To determine
Categorizing the market.
Subpart (b):
To determine
Categorizing the market.
Subpart (c):
To determine
Categorizing the market.
Subpart (d):
To determine
Categorizing the market.
Subpart (e):
To determine
Categorizing the market.
Subpart (f):
To determine
Categorizing the market.
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Why is there a price markup over marginal cost in
monopolistic competition?
a downward-sloping demand curve, price exceeds
marginal cost
The graph shows the demand curve and marginal revenue
curve of Whitewater, Inc., a producer of rubber rafts in
monopolistic competition.
Draw the marginal cost curve if the firm produces 150 rafts
a week. Label it.
Draw a point at the intersection of the MC and MR curves.
Draw a point to show the price that Whitewater charges for
a raft when it produces 150 rafts a week.
Draw an arrow to show the amount of Whitewater's
markup.
What is Whitewater's markup?
Whitewater's markup is $750 a raft.
750-
675-
600-
525-
450-
375-
300-
225-
150-
75-
0
Price and cost (dollars per raft)
50
100
150
Quantity (rafts per week)
D
MR
200
>>> Draw only the objects specified in the
question.
21
Explain your reasons
1.If demand is elastic, the difference between the monopolistic price and the competitive market price would be greater compared to when the elasticity is low.
2. In 2011, heavy rain and cold weather destroyed 10 percent of the world coffee products. Therefore, it is expected that people consume less coffee.
What is the first item to identify when determining the short-run equilibrium for a monopolistically competitive firm?
a. the total profits
b. the total revenue
C. the total costs
d. the profit-maximizing level of output
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...
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Similar questions
- Which of the following is not true of a monopolistically competitive firm? a. The firm will not likely earn an economic profit in the long run. b. The firm will maximize profits by producing where MR = MC. c. The firm will produce an efficient quantity where average total cost is minimized.arrow_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_forwardThe graph shows the demand curve, marginal revenue curve, and marginal cost curve of Java Time, Inc., a producer of espresso machines in monopolistic competition. Draw a point at the firm's the profit-maximizing price and quantity. Label it 1. Draw an arrow that shows Java Time's markup. Draw the average total cost curve such that Java Time does not have excess capacity. Label it. Draw a point at the intersection of the ATC curve and the MC curve. Label it 2. Java Time's markup is $a machine. 240 220- 200- 180- 160- 140 120- 100- 80- 60- 40- 20- 04 0 Price and cost (dollars per machine) MC 100 200 300 400 Quantity (espresso machines per week) D MR 500arrow_forward
- Use the graph to answer the question that follows. MC ATC Quantity The graph represents a firm in monopolistic competition. Which of the following statements about the firm's price is accurate? The price is set at the intersection of MR and MC. The price is set at the intersection of MC and D. The price is set at the intersection of ATC and MC. The price is set at the intersection of ATC and D. The price is set on the ATC above the intersection of MC and D.arrow_forwardif 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 increasearrow_forwardThe cost of producing a tube of tooth paste is $0.05. If the market for tooth paste is monopolistically competitive, a manufacturer who charges $0.05 for each bottle will ________. a. exit the industry in the long run b. earn zero economic profits in the short run c. incur a loss in the short run d. shut down production in the short runarrow_forward
- Explain monopolistic competition. How is it similar to perfect competition? How does it differ from perfect competition?arrow_forwardDE Quantity MC MR ATC Demand The graph above represents a firm in a monopolistically competitive market. Which of the following is true? The firm's profit-maximizing quantity is E. The firm is making a profit of (A - B) x D. The firm is making zero economic profits. The firm is making a loss of (A - B) x D.arrow_forwardConsider perfect competition and monopolistic competition. In which market structure(s) will we see price equal to marginal cost at the last unit produced in the long-run equilibrium? a perfect competition b monopolistic competition c both perfect and monopolistic competition d neitherarrow_forward
- Refer to the graphic above. The output produced in this market (Monopolistic) is ____ units, while produced under a comparable perfectly competitive market would have been at least ____ units.arrow_forwardWhich of the following gives the customers better products that are not offered by other competitors? Select one: a. Competitive advantage b. Branding c. Advertisements d. Marketing Strategyarrow_forwardThe graph depicts a monopolistically competitive firm. Dollars ($) 90 80 65 55 50 MC 0 ATC MR 10 20 35 45 50 Quantity of Output (Units) Refer to the above graph. This monopolistically competitive firm is: making economic profit in the long run. making economic profit in the short run making a loss in the long run. making a loss in the short run.arrow_forward
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