4. Is monopolistic competition efficient? Suppose that a company operates in the monopolistically competitive market for denim jacke The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (M curve, and average total cost (ATC) curve for the firm. 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) indicate the minimum average total cost the firm faces and the quantity associated with that ce ? PRICE (Dollars per jacket) 8 2 22 & 10 0 MC 0 10 ATC MR 20 30 40 50 60 70 QUANTITY (Thousands of jackets) True False Demand 90 100 + Mon Comp Outcome Min Unit Cost Because this market is monopolistically competitive, you can tell that it is in long-run equilibrium by the fact that at the optimal quantity for each firm. Further, the quantity the firm produces the efficient scale. in long-run equilibrium is True or False: This indicates that there is a markup on marginal cost in the market for jackets. Monopolistically competitive markets may be socially inefficient due to the presence of too many or too few firms. The presence of the externality implies that there is too much entry of new firms in the market.
4. Is monopolistic competition efficient? Suppose that a company operates in the monopolistically competitive market for denim jacke The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (M curve, and average total cost (ATC) curve for the firm. 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) indicate the minimum average total cost the firm faces and the quantity associated with that ce ? PRICE (Dollars per jacket) 8 2 22 & 10 0 MC 0 10 ATC MR 20 30 40 50 60 70 QUANTITY (Thousands of jackets) True False Demand 90 100 + Mon Comp Outcome Min Unit Cost Because this market is monopolistically competitive, you can tell that it is in long-run equilibrium by the fact that at the optimal quantity for each firm. Further, the quantity the firm produces the efficient scale. in long-run equilibrium is True or False: This indicates that there is a markup on marginal cost in the market for jackets. Monopolistically competitive markets may be socially inefficient due to the presence of too many or too few firms. The presence of the externality implies that there is too much entry of new firms in the market.
Chapter1: Making Economics Decisions
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4. Is monopolistic competition efficient?
Suppose that a company operates in the monopolistically competitive market for denim jackets.
The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC_
curve, and average total cost (ATC) curve for the firm.
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 cos
?
CE (Dollars per jacket)
100
80
60
40
30
20
10
0
0
MC
ATC
MR
10 20 30 40 50 60
QUANTITY (Thousands of jackets)
70
Demand
(426) Nightly News Full Broadcast - N
80 90 100
+
Mon Comp Outcome
*
Min Unit Cost
Because this market is monopolistically competitive, you can tell that it is in long-run equilibrium
at the optimal quantity for each firm. Further, the quantity the firm produces
the efficient scale.
by the fact that
in long-run equilibrium is
True or False: This indicates that there is a markup on marginal cost in the market for jackets.
True
False
Monopolistically competitive markets may be socially inefficient due to the presence of too many or
too few firms. The presence of the
externality implies that there is too
much entry of new firms in the market.
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