1. Consider a monopolistically competitive market of hair salon. Glamour Hair Salon is one of the many firms in the market best known for their hair spa service. They have been running the business for 30 years already. With this, imagine its long run equilibrium. a. Illustrate using a graph the demand curve of Glamour Hair Salon's hair spa service. Using the same graph, draw its marginal-revenue curve, average-total-cost curve, and marginal-cost curve. Label its profit-maximizing output and price.. b. Determine the Glamour Hair Salon's profit in hair spa. Briefly describe it.. c. Using the same graph you made in Letter a, indicate the consumer surplus generated of the clients the Salon. Similarly, indicate the deadweight loss relative to the efficient level of their hair spa service...

1. Consider a monopolistically competitive market of hair salon. Glamour Hair Salon is one of the many firms in the market best known for their hair spa service. They have been running the business for 30 years already. With this, imagine its long run equilibrium. a. Illustrate using a graph the demand curve of Glamour Hair Salon's hair spa service. Using the same graph, draw its marginal-revenue curve, average-total-cost curve, and marginal-cost curve. Label its profit-maximizing output and price.. b. Determine the Glamour Hair Salon's profit in hair spa. Briefly describe it.. c. Using the same graph you made in Letter a, indicate the consumer surplus generated of the clients the Salon. Similarly, indicate the deadweight loss relative to the efficient level of their hair spa service...

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. Draw a diagram depicting a firm that is making a profit in a monopolistically competitive market. Now show what happens to this firm as new firms enter the industry.
1. Consider a monopolistically competitive market of hair salon. Glamour Hair Salon is one of the many firms in the market best known for their hair spa service. They have been running the business for 30 years already. With this, imagine its long run equilibrium.
Marginal revenue and marginal cost intersect at point
Ansswer letters A,B, C only
2.32 CATEGORIZATION What type of market is it? In part A, determine whether each market listed is an example of Perfect Competition (PC) or Monopolistic Competition (MC). In part B, determine whether each item is a characteristic of Perfect Competition or Monopolistic Competition, or both (PC and MC). Circle your answer choices. A. 1. РC MC breakfast cereal 2. PC MC wheat 3. PC 4. PC MC fast food MC milk 5. PC MC video rentals . PC MC large number of buyers and sellers 7. РС MC the seller "takes" the market price 8. РС MC the seller aims to maximize profit 9. PC MC the most competitive market structure 10. PC MC the product is homogeneous B.
1. Why does the model of monopolistic competition does it have that name?
2. Consider this statement: " Because price equals long -run average cost and profits are zero, a monopolistically competitive firm is efficient.". Do you agree or disagree? Explain.
1. Consider the following graph: Price (dollars per cup) $6.00 MC ATC 3.50 Profit 2.50 Demand 0 1 2 3 45 6 7 8 9 10 Quantity (cafe lattes per week) Profit-maximizing quantity of caté lattes MR show how the long-run equilibrium in a monopolistically competitive market differ from that in a perfectly competitive market?
5. How short-run profit or losses induce entry or exit Citrus Scooters is a company that manufactures electric scooters in a monopolistically competitive market. The following graph shows the demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC) for Citrus. Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. PRICE (Depar 500 450 350 300 250 300 150 100 MC 50 50 100 ATC MR Demand 150 200 250 300 350 400 450 500 QUANTITY (Scooters) +- Monopolically Comp Profit or Lasa ▼profit, which means there are Given the profit-maximizing choice of output and price, Citrus Scooters is earning sellers in the industry relative to the long-run equilibrium amount. Now consider the long run in which scooter manufacturers are free to enter and…
1. If the price of a movie rental is $4.00, Mary will rent 5 movies in a month. If the price of a movie rental is $3.00, Mary will rent 8 movies in a month. Mary’s price elasticity of demand for movie rentals is A. 0.00. B. 0.63. C. 1.00. D. 1.59. 2. A monopolistically competitive firm will benefit by spending some of its revenues advertising the product it produces. A. True B. False
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