4. Is monopolistic competition efficient? Suppose that a firm produces wooden train engines in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. 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 engine) 100 90 80 70 60 50 40 --- 30 20 10 0 MO 0 I 1 I I 10 20 30 ATC 1 I MR Demand 40 50 60 70 80 90 100 Mon Comp Outcome Min Unit Cost
4. Is monopolistic competition efficient? Suppose that a firm produces wooden train engines in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. 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 engine) 100 90 80 70 60 50 40 --- 30 20 10 0 MO 0 I 1 I I 10 20 30 ATC 1 I MR Demand 40 50 60 70 80 90 100 Mon Comp Outcome Min Unit Cost
Chapter14: Monopolistic Competition And Product Differentiation
Section: Chapter Questions
Problem 7P
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