2. Monopolistic competition in the short run and the long run Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). 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. 500 450 Monopolistically Competitive Outcome 400 350 300 Profit or Loss 250 200 150 ATC 100 50 MC MR Demand 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bikes) Given the profit-maximizing choice of output and price, the shop is earning profit, which means there are shops in the Negative Positive Fewer ORM ORe industry than in long-run equilibrium. ZeRO, Now consider the long run in which bike manufacturers are free to enter and exit the market. Show the possible effect of easy entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph. Demand Demand QUANTITY (Bikes) (3 Which of the following statements are true about both monopolistic competition and monopoly? Check all that apply. Price equals average total cost in the long run. Firms earn zero economic profit in the long run. Firms are not price takers. Price is above marginal cost. PRICE, COSTS, AND REVENUE (Dollars per bike) PRICE (Dollars per bike)
2. Monopolistic competition in the short run and the long run Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). 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. 500 450 Monopolistically Competitive Outcome 400 350 300 Profit or Loss 250 200 150 ATC 100 50 MC MR Demand 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bikes) Given the profit-maximizing choice of output and price, the shop is earning profit, which means there are shops in the Negative Positive Fewer ORM ORe industry than in long-run equilibrium. ZeRO, Now consider the long run in which bike manufacturers are free to enter and exit the market. Show the possible effect of easy entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph. Demand Demand QUANTITY (Bikes) (3 Which of the following statements are true about both monopolistic competition and monopoly? Check all that apply. Price equals average total cost in the long run. Firms earn zero economic profit in the long run. Firms are not price takers. Price is above marginal cost. PRICE, COSTS, AND REVENUE (Dollars per bike) PRICE (Dollars per bike)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
- The
Monopolistically Competitive Outcome & Profit or Loss need to be drawn on the graph. - The Profit maximizing choice of output underlined blank space can be filled in with the word options I provided.
- Check all that apply..
I just want to say Thanks for all your help. =) -------}-----@
Transcribed Image Text:2. Monopolistic competition in the short run and the long run
Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demand
curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC).
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.
500
450
Monopolistically Competitive Outcome
400
350
300
Profit or Loss
250
200
150
ATC
100
50
MC
MR
Demand
50
100
150
200
250
300
350
400
450
500
QUANTITY (Bikes)
Given the profit-maximizing choice of output and price, the shop is earning
profit, which means there are
shops in the
Negative
Positive
Fewer ORM ORe
industry than in long-run equilibrium.
ZeRO,
Now consider the long run in which bike manufacturers are free to enter and exit the market.
Show the possible effect of easy entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph.
Demand
Demand
QUANTITY (Bikes)
(3
Which of the following statements are true about both monopolistic competition and monopoly? Check all that apply.
Price equals average total cost in the long run.
Firms earn zero economic profit in the long run.
Firms are not price takers.
Price is above marginal cost.
PRICE, COSTS, AND REVENUE (Dollars per bike)
PRICE (Dollars per bike)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education