Both screenshots are from the same homework question. Please explain it in details. 3. How short-run profit or losses induce entry or exitFantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demandcurve, 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 competitivecompany. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss.500450Monopolistically Competitive Outcome400350300Profit or Loss250АТС20015010050 MCMRDemand50100150200250300350400450500QUANTITY (Bikes)Given the profit-maximizing choice of output and price, the shop is makingprofit, which means there areshops in the industry relative to the long-run equilibrium.Now consider the long run in which bike manufacturers are free to enter and exit the market.Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph.PRICE (Dollars per bike) Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph.DemandDemandQUANTITY (Bikes)Which of the following statements are true about both monopolistic competition and monopolies? Check all that apply.O Price equals average total cost in the long run.Firms earn zero profit in the long run.O Price is above marginal cost.O Firms are not price takers.PRICE (Dollars per bike)

In monopolistic competitive market, profit is maximized at a point where marginal revenue is equal…

3. How short-run profit or losses induce entry or exit 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 ATC 200 150 100 50 -MC MR Demand 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bikes) PRICE (Dollars per bike)

3. How short-run profit or losses induce entry or exit 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 ATC 200 150 100 50 -MC MR Demand 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bikes) PRICE (Dollars per bike)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Both screenshots are from the same homework question. Please explain it in details.

3. How short-run profit or losses induce entry or exit
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
АТС
200
150
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 making
profit, which means there are
shops in the industry relative to the long-run equilibrium.
Now consider the long run in which bike manufacturers are free to enter and exit the market.
Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph.
PRICE (Dollars per bike)

Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph.
Demand
Demand
QUANTITY (Bikes)
Which of the following statements are true about both monopolistic competition and monopolies? Check all that apply.
O Price equals average total cost in the long run.
Firms earn zero profit in the long run.
O Price is above marginal cost.
O Firms are not price takers.
PRICE (Dollars per bike)

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