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- cosider this statement:" because price equals longr-un average cost and profits are zero, a monopolistically competitive firm is efficient. "Do you agree ir disagree? explainBriefly explain monopolistic competition and provide an example of this in a South African industry.Marginal revenue and marginal cost intersect at point Multiple Choice C. d. a. b.
- There are no long run econoic profit in monopolistic competition although there may be economic profit in the shprt run. Do you agree? Explain using IllustrationsSuppose the accompanying graph depicts a monopolistically competitive firm earning positive economic profits. Please shift the curves to show the effects of long-run competition and then place Point A at the price and quantity at which the firm will produce inthe long-run MC ATC MR A Quantity Price and CostWhat does it mean to say that: “A firm operating under perfect competition conditions is a pricetaker"?Why Can't this firm set any price it chooses? What if it operates in a monopolisticallycompetitive market, would it be able to set the price? Why? Give some real life examples tosupport your answer.2. You overheard Mr. John, the newly-hired marketing manager, saying: “I think our company shouldtake advantage of economies of scale by increasing output, thereby spreading out our overheadfixed costs”.Would you agree with this statement? If not, provide a better description for the term“economies of scale”. Explain how they may be achieved by organizations. Highlight what wouldprevent them to occur.3. For many, the principle “marginal revenue equal marginal cost" condition for profit maximizationis rather confusing.Discuss the rationale behind the condition, highlighting how different it is from the break-evenanalysis
- 9 of 15 Warwick Inc. produces in a monopolistically compettive market. Which of the following corectly explains howa fmin this market struchure would transition trom the short run to the long run? O The supemomal profits eamed by Warwick Inc in the short run will attract new firma into the market. This wil shit the market supply curve to the right, which will reduce the market price and the price faced by Warwick ine. The price wil keep falling until Average Revenue equals Average Cost and only normal profits are made. O The supermormal profits eamed by Warwick Inc. in the short run will attract new firms into he martet. This wil shit Warwick ine. demand curve to the left and t wit continue to shit left until Average Revenue equals Average Cost and only normal profits are made O The supemomal profits eamed by Wanwick Inc. in the short run will lead to the market demand aurve shifing to the right, which will raise the price fims can sell at and ts wil atract now frms into the market.…The graph shows the demand curve and marginal revenue curve of Java Time, Inc., a producer of espresso machines in monopolistic competition. Draw the firm's marginal cost curve if Java Time produces 125 espresso machines a week. Label it Draw a point at the profit-maximizing quantity and price. if average total cost at the profit-maximizing quantity is $100 a machine, what is Java Time's economic profit? Java Time's economic pro t is $ Selected: none ON 804 604 0 Price and cost (dollars per machine) 25 50 75 100 125 150 1175 200 225 250 2 Quantity (espresso machines per week) >>> Draw only the objects specified in the question ate Clear ?Given that this firm is producing in a Monopolistic Competition (M.C.) market structure (with, e.g., 30 fırms), suppose this market were to transform, over time, into an oligopoly type of market structure, with only 3 fırms dominating all the national sales. Describe one advantage, plus one disadvantage, of oligopolies to society (hint: pricing behavior, types of efficiency, etc.) Edit View Insert Format Tools Table 12pt v Paragraph v BIU Av MacBook Pro -> G Search or type URL & %23 %24 6 7 9. deleto 3 4 E RI T Y. U tab G H. ps lock
- ls uccess Tips ■ccess Tips NOUT Actumpto Koup the Highest/3 3. Is monopolistic competition efficient? Suppose that a firm produces baseball bats in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. PRICE (Dollars par bat) 80 70 60 20 MO о о 10 20 40 ATC 60 QUANTITY (Thousands of bas) Demand Man Camp Outcome Min Unit Cost Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that optimal quantity. Furthermore, the quantity the firm produces in long-run equilibrium is average total cost. at the the quantity at which…Which basic competitive strategy does Google follow?Use the following graph for a monopolistically competitive firm in a constant-cost industry to answer the question. P Po 0 This firm is Qo MR MC D ATC Q