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.
Chapter14: Monopolistic Competition And Product Differentiation
Section: Chapter Questions
Problem 5P
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