3. The following graph summarizes the demand and costs for a firm that operates in a monopolistically competitive market. (LOI,LO3, LOS)$2202102001901801701601501401301201101009080706050403020100MR8 9 10 11 12 13 14 15 16a. What is the firm's optimal output?b. What is the firm's optimal price?c. What are the firm's maximum profits?d. What adjustments should the manager be anticipating?ATC22 23 24 25Quantity

When diverse products are offered in the market, it is called a monopolistic market. In the market,…

3. The following graph summarizes the demand and costs for a firm that operates in a monopolistically competitive market. (. LO3, LOS) $220 210 200 190 180+ 170 140 150 130 130 110 90 NO 20 40 50 40 30 20- 10 ATC MR 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 a. What is the firm's optimal output? b. What is the firm's optimal price? c. What are the firm's maximum profits? d. What adjustments should the manager be anticipating? Quantity

3. The following graph summarizes the demand and costs for a firm that operates in a monopolistically competitive market. (. LO3, LOS) $220 210 200 190 180+ 170 140 150 130 130 110 90 NO 20 40 50 40 30 20- 10 ATC MR 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 a. What is the firm's optimal output? b. What is the firm's optimal price? c. What are the firm's maximum profits? d. What adjustments should the manager be anticipating? Quantity

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Monopolistic Competition

Section: Chapter Questions

Problem 5PA

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What will be the economic profit or loss for this monopolistically competitive firm at the profit-maximizing level of output?
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Suppose the market for toothpaste is monopolistically competitive and in? long-run equilibrium. The demand? (and marginal? revenue) for a firm in this industry is illustrated in the
Assume that in short-run equilibrium, a particular monopolistically competitive restaurant (Applebee's) charges $12 for each order of Chicken Parmesan and sells 52 orders per day. The average total cost (ATC) for those 52 orders is $10. How much revenue will the firm take in each day? $ What will be the firm's economic profit or loss on Chicken Parmesan? Next, suppose that other restaurants add/remove chicken parmesan from their menus (entry or exit occurs) and a long-run equilibrium is established. If the Applebees daily Chicken Parmesan orders remain at 52 units, what price will it be able to charge? $ What will be its economic profit or loss?
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…
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(12) Suppose all firms in a monopolistically competitive industry were merged into one large firm. Would that new firm produce as many different brands? Would it produce only a single brand? Explain.
2b. Firm’s market power: an explanation for a firm’s pricing behavior. The economists contribute an argument to the theory of the firm that: firms in different markets, and even different firms within the same market, are likely to have different degree of market power. And in turn, a firm’s market power is believed to help its capacity to charge relatively high prices compared to their rivals without losing all of its customers. What is your understanding of the concept of market power? What are the factors determining a firm’s market power? What is the extent of a firm’s market power in perfectly competitive markets versus monopolistically competitive markets? Observe an online market platform and search for a real-life example of a firm in a competitive market charging different price levels from its rivals (the competitors who are selling similar products). Give an explanation of the relevance of the market power to the firm’ pricing decision.
3. Is monopolistic competition efficient? Suppose that a firm produces tennis racquets in a monopolistically competitive market. The following graph shows its demand (D) curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average cost (AC) curve. Assume that all firms in the industry face the same cost structure. Place the tan point (dash symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place the purple point (diamond symbol) to indicate the point at which this firm would produce in the long run if it operated in a perfectly competitive market. Note: Dashed drop lines will automatically extend to both axes. 100 8 PRICE, COSTS, AND REVENUE (Dollars per racquet) 80 70 R 40 30 20 10 C D D 10 Under... MR 30 40 50 70 QUANTITY (Thousands of racquets) Monopolistic Competition Perfect Competition D Average Cost (Dollars per racquet) 60 55 90 Compare the average cost and the production level in the…
FOR THE NEXT THREE QUESTIONS use the following graph which illustrates the cost and demand for a firm competing in a monopolistically competitive market. Price Q3 Q2 Q4 O Q1 OOO P₁ P₂ P3 P4 Q₁ Q₂ MR Q3 Q4 Quantity What is the profit maximizing output for the monopolistic competitor? MC D ATC
You are the manager of a firm that charges customers $16 per unit for the first unit purchased and $12 per unit for each additional unit purchased in excess of one unit. The accompanying graph summarizes your relevant demand and costs. a. What is the economic term for your firm’s pricing strategy? b. Determine the profits you earn from this strategy. c. How much additional profit would you earn if you were able to perfectly price discriminate?
QUESTION 19 Refer to the graph below for a monopolistically competitive firm. Price MC 160 140 ATC 123.33 Demand 90 56.67 MR 100 133.33 154.92 Quantity In the above graph the firm's total revenue at the profit maximization quantity is O $9,000 $16.000 O $14,000 O 55,667