1009080Mon Comp Outcome7060Min Unit Cost50ATC40302010MCMRDemand102030405060708090100QUANTITY (Thousands of bats)Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that ▼ at the optimalquantity for each firm. Furthermore, the quantity the firm produces in long-run equilibrium isthe efficient scale.True or False: This indicates that there is excess capacity in the market for bats.TrueFalseMonopolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of theexternality implies that there is too little entry of new firms in the market.PRICE (Dollars per bat) 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.1009080Mon Comp Outcome70Min Unit Cost50ATC40302010MCMRDemand102030405060708090100QUANTITY (Thousands of bats)Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that▼ at the optimalquantity for each firm. Furthermore, the quantity the firm produces in long-run equilibrium isthe efficient scale.PRICE (Dollars per bat)

100 90 80 Mon Comp Outcome 70 60 Min Unit Cost 50 ATC 30 20 10 MC MR Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of bats) Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that at the optimal quantity for each firm. Furthermore, the quantity the firm produces in long-run equilibrium is v the efficient scale. True or False: This indicates that there is excess capacity in the market for bats. True False Monopolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of the externality implies that there is too little entry of new firms in the market. PRICE (Dollars per bat)

100 90 80 Mon Comp Outcome 70 60 Min Unit Cost 50 ATC 30 20 10 MC MR Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of bats) Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that at the optimal quantity for each firm. Furthermore, the quantity the firm produces in long-run equilibrium is v the efficient scale. True or False: This indicates that there is excess capacity in the market for bats. True False Monopolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of the externality implies that there is too little entry of new firms in the market. PRICE (Dollars per bat)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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