1 29) A major distinction between a monopolistically competitive firm and an oligopolisticfirm is thatA) one is a price taker and the other is a price maker.B) a recognized interdependence exists between firms in one industry but not irthe other.C) one always produces differentiated products and the other always produces :homogeneous product.D) one necessarily faces a downward-sloping demand curve and the other ahorizontal demand curve.30) The following table is for a purely competitive market for resources.Number ofTotal ProductProduct PriceWorkers$311626334440344How many more workers will the firm hire when the wage rate is $15 instead of $30?A) 1 workerB) 2 workersC) 3 workersD) 4 workers31) If oligopolistic firms facing similar cost and demand conditions successfully collude,price and output results in this industry will be most accurately predicted by which of thfollowing models?A) the kinked demand curve model of oligopolyB) the price-leadership model of oligopolyC) the pure monopoly modelD) the monopolistic competition model

Introduction A monopolistically competitive is a market structure in which a large number of firms…

29) A major distinction between a monopolistically competitive firm and an oligopolistic firm is that A) one is a price taker and the other is a price maker. B) a recognized interdependence exists between firms in one industry but not ir the other. C) one always produces differentiated products and the other always produces : homogeneous product. D) one necessarily faces a downward-sloping demand curve and the other a horizontal demand curve.

29) A major distinction between a monopolistically competitive firm and an oligopolistic firm is that A) one is a price taker and the other is a price maker. B) a recognized interdependence exists between firms in one industry but not ir the other. C) one always produces differentiated products and the other always produces : homogeneous product. D) one necessarily faces a downward-sloping demand curve and the other a horizontal demand curve.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter14: Monopolistic Competition And Product Differentiation

Section: Chapter Questions

Problem 16P

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Which of the following is true of a monopolistically competitive firm in long run equilibrium? Price is greater than marginal cost and marginal revenue is equal to average total cost Price is greater than marginal revenue and marginal cost is equal to average total cost Price is greater than marginal revenue and marginal cost is greater than average total cost O Marginal revenue is equal to marginal cost and price is equal to average total cost Marginal revenue is greater than marginal cost and price is equal to average total cost
Using appropriate diagrams, show a monopolistic and a monopolistically competitive firm whentheir respective markets are in long-run equilibrium. Outline the long-run outcomes in eachmarket with particular attention given to economic profits generated by each firm and themaximisation of total surplus associated with the market.
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Suppose all firms in a monopolistically competitive industry face the same demand and cost curves pictured in the figure below: Price, Costs ,MC 14 ATC 10 9. ..------ --- .------ - AVC 8 6. --- MR 1 3 Output In the long run: New firms will enter; industry supply curve will shift to the right New firms will enter; firm demand curves will shift to the left New firms will enter; firm demand curves will become less price elastic Firms will exit; demand curve for existing firms will shift to the right
The most important factor that drives the long-run profit to zero in monopolistic competition is the elasticity of the market demand curve the elasticity of the firm's demand curve free entry and exit O the reaction of rival firms to a change in price What is one difference between the Cournot and Stackelberg models? O In Cournot, both firms make price decisions simultaneously, and in Stackelberg, one firm sets its price level first O In Stackelberg, both firms make price decisions simultaneously, and in Cournot, one firm sets its price level first O In Cournot, both firms make output decisions simultaneously, and in Stackelberg, one firm sets its output level first O In Stackelberg, both firms make output decisions simultaneously, and in Cournot, one firm sets its output level first O Profits are zero in Cournot and positive in Stackelberg
Suppose that a monopolistically competitive restaurant is currently serving 250 meals per day (the output where MR = MC). At that output level, ATC per meal is $10 and consumers are willing to pay $13 per meal. Instructions: Enter your answers as whole numbers. What is the size of this firm's profit or loss? $0 Will there be entry or exit? (Click to select) As a result, will this restaurant's demand curve shift left or right? (Click to select) Assume that the allocatively efficient output level in long-run equilibrium is 210 meals. In long-run equilibrium, suppose that this restaurant charges $11 per meal for 180 meals and that the marginal cost of the 180th meal is $9. What is the size of the firm's profit? $[ Suppose that the allocatively efficient output level in long-run equilibrium is 210 meals. In long-run equilibrium, suppose that this restaurant charges $11 per meal for 180 meals and that the marginal cost of the 180th meal is $9. Is the deadweight loss for this firm greater…
Explain the role of brands in a monopolistic competition market. How can the pricing and profits for a firm in this market structure differ from perfect competition and when will the two market types reach the same outcome? Why does that make it essential for firms to have a strong brand identity? Give an example of a product with this type of market structure and discuss (briefly) how the firms have established their brands.
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1. Consider two duopolists who each have a constant marginal cost c = e2 = 3 and face inverse demand P = 15 – Q,where Q = Q1 + Q2 is the total output of both firms. 1. Find the Cournot equilibrium quantity for each firm, the resulting market price, and the profits for each firm. 2. Find the Stackelberg equilibrium quantities for each firm, and the price, and the profits for each firm supposing that Firm 1 is the industry leader. 3. Suppose that Firm 2 figures out a way to lower its marginal cost to ez = 0 while firm 1 still has a marginal cost equal to 1: c = 3. How does this affect the Cournot equilibrium quantities, price, and profits? 4. How does this affect the Stackelberg equilibrium (with Firm 1 still as the leader) quantities, price, and profits?
Problem 1. HHI in the Bertrand Triopoly Equilibrium It's a Bertrand Triopoly - hence we know there are 3 firms in the industry-in-question, who competes in "price". The inverse demand functions for Firm 1, 2, and 3 are as follows: q1 = 40 - 1.5p1 +0.5p2 +p3 q2 = 40 + 1.5p1 - 3p2+p3 q3 = 40 + 2p1 + 1.5p2 - 4p3 For each firm, the marginal cost of production is $2.50/unit produced and sold. Apparently, the firms' products are differentiated. You cannot impose symmetry across firms. Therefore, please solve each firm's profit maximization problem, impose equilibrium, and solve for each firm's "action" in equilibrium. After that, please calculate the Herfindahl- Hirschman Index (HHI) in the industry in equilibrium.
are 13-7 sis and evenue $4 P2 MC FM/ ATC E OG AS SS AVC (oo) ubonq aviimoo loiteiloqo sol o bnal Po Demand MA Quantity ure 13-7 shows short-run cost and demand curves for a monopolistically competitive firm in the footwear market. 3) Refer to Figure 13-7. Which of the following statements describes the best course of action for the firm depicted in the diagram? * A) The firm should minimize its losses by producing Qy units and charging a price of P1. B) The firm should minimize its losses by producing Qy units and charging a price of P2. C) The firm should minimize its losses by producing Qy units and charging a price of Po. D) The firm should exit the industry because its price is less than its average total cost. 3) A 4) Refer to Figure 13-7. Which of the following is the area that represents the profit or loss experienced by the firm? A) A loss represented by the rectangle PivwPo. B) An accounting profit equal to P1vwPo. C)A loss represented by the rectangle P2uvP1. D) A loss…