Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 17, Problem 5SPPA
To determine
To explain:
The behaviour of firms in long-run, whether they will arrive in the shoes market or exit from the market in long-run.
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Here is a graph for monopolistic competition in long run equilibrium. After seeing thisgraph, explain why this is bad news for an individual food truck business.
Draw a diagram to show the long-run equilibrium of a firm in a Monopolistically Competitive market clearly labeling the profit maximizing level of Q and P. Is P greater/less than ATC? Is P greater/less than MC? How much profit firm is earning in the long run? Also show the efficient level of outcome and explain why this firm does not produce at the efficient level.
The 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.
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Price and cost (dollars per machine)
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Quantity (espresso machines per week)
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Chapter 17 Solutions
Foundations of Economics (8th Edition)
Ch. 17 - Prob. 1SPPACh. 17 - Prob. 2SPPACh. 17 - Prob. 3SPPACh. 17 - Prob. 4SPPACh. 17 - Prob. 5SPPACh. 17 - Prob. 6SPPACh. 17 - Prob. 7SPPACh. 17 - Prob. 8SPPACh. 17 - Prob. 9SPPACh. 17 - Prob. 10SPPA
Ch. 17 - Washtenaw Dairy in Ann Arbor, Michigan, sells 63...Ch. 17 - Prob. 2IAPACh. 17 - Prob. 3IAPACh. 17 - Prob. 4IAPACh. 17 - Prob. 5IAPACh. 17 - Use the following information to work Problems 5...Ch. 17 - Prob. 7IAPACh. 17 - Prob. 8IAPACh. 17 - Prob. 9IAPACh. 17 - Prob. 1MCQCh. 17 - Prob. 2MCQCh. 17 - Prob. 3MCQCh. 17 - Prob. 4MCQCh. 17 - Prob. 5MCQCh. 17 - Prob. 6MCQCh. 17 - Prob. 7MCQ
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- What does it mean to say that: “A firm operating under perfect competition conditions is a price taker"?Why Can't this firm set any price it chooses? What if it operates in a monopolistically competitive market, would it be able to set the price? Why? Give some real-life examples to support your answer.Discuss the rationale behind the principle “marginal revenue equal marginal cost" condition for profit maximization.arrow_forwardThe monopolistically competitive firm represented in the graph is in: $ $11.40 $10.20 $7.50 0 520 630 MC ATC MR Firm's Demand Quantity Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a long-run equilibrium since it is earning zero profit. b short-run equilibrium since it is earning zero profit. C short-run equilibrium, but not long-run equilibrium since it is earning positive economic profit. d long-run equilibrium, but not short-run equilibrium since it is earning positive economic profit. Your answerarrow_forwardGive two characteristics of the following:a. a perfectly competitive marketb. a monopolistic marketarrow_forward
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