4. Is monopolistic competition efficient?Suppose that a company operates in the monopolistically competitive market for rugby kits. The following graph shows the demand curve, marginalrevenue (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 cost.?PRICE (Dollars per kit)10090807060504030201000MC10TrueATCFalseMR20 30 40 50 60 70QUANTITY (Thousands of kits)80Demand90 100Mon Comp OutcomeBecause this market is monopolistically competitive, you can tell that it is in long-run equilibrium by the fact thatfor each firm. Further, a monopolistically competitive firm's average total cost in long-run equilibrium iscost.Min Unit CostTrue or False: This indicates that there is excess capacity in the market for kits.at the optimal quantitythe minimum average totalMonopolistically competitive markets may be socially inefficient due to the presence of too many or too few firms. The presence of theexternality implies that there is too little entry of new firms in the market.

Monopolistic competition exists when many firms offer contending products or services that are…

4. Is monopolistic competition efficient? Suppose that a company operates in the monopolistically competitive market for rugby kits. 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 cost. PRICE (Dollars per kit) 100 90 80 70 50 9 20 10 0 0 MC 10 ATC MR 20 30 40 50 60 70 QUANTITY (Thousands of kits) 80 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 for each firm. Further, a monopolistically competitive firm's average total cost in long-run equilibrium is cost. at the optimal quantity the minimum average total

4. Is monopolistic competition efficient? Suppose that a company operates in the monopolistically competitive market for rugby kits. 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 cost. PRICE (Dollars per kit) 100 90 80 70 50 9 20 10 0 0 MC 10 ATC MR 20 30 40 50 60 70 QUANTITY (Thousands of kits) 80 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 for each firm. Further, a monopolistically competitive firm's average total cost in long-run equilibrium is cost. at the optimal quantity the minimum average total

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The graph shows the cost curves, demand curve, and marginal revenue curve of a firm in monopolistic competition. If this firm is maximizing profits, what is the firm's economic profit in millions of dollars? [NOTE: The quantities shown in the graph are in millions. Please enter the number of millions of dollars of economic profit in the statement below.] The firm's economic profit is $ million. 2207 200- 180- 160- 140- 120- 100- 80- 60- 40- 20- Price and cost (dollars per pair) 10+ 0.0 MC MR ATC D 0.5 1.0 1.5 2.0 2.5 Quantity (millions of pairs of Uggs per year) 3.0
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