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 demar 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 competit company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. ? PRICE (Dollars per scooter) 500 450 400 350 300 250 200 150 100 50 MC 0 1 ATC MR Demand 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Scooters) Monopolistically Competitive Outcome Profit or Loss

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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 (Dollars per scooter)
500
450
400
350
300
250
200
150
100
50 MC
0
0
50
100
1
ATC
Demand
150 200 250 300 350 400 450 500
QUANTITY (Scooters)
MR
Monopolistically Competitive Outcome
Given the profit-maximizing choice of output and price, Citrus Scooters is earning
Profit or Loss
sellers in the industry relative to the long-run equilibrium amount.
profit, which means there are
Transcribed Image Text: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 (Dollars per scooter) 500 450 400 350 300 250 200 150 100 50 MC 0 0 50 100 1 ATC Demand 150 200 250 300 350 400 450 500 QUANTITY (Scooters) MR Monopolistically Competitive Outcome Given the profit-maximizing choice of output and price, Citrus Scooters is earning Profit or Loss sellers in the industry relative to the long-run equilibrium amount. profit, which means there are
Now consider the long run in which scooter manufacturers are free to enter and exit the market.
Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of scooters on the following graph.
PRICE (Dollars per scooter)
QUANTITY (Scooters)
Firms earn zero profit in the long run.
Demand
Which of the following statements are true for both monopolistically competitive markets and monopoly markets? Check all that apply.
Firms are not price takers.
Demand
O Firms can earn positive profit in the long run.
Price is above marginal cost.
Transcribed Image Text:Now consider the long run in which scooter manufacturers are free to enter and exit the market. Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of scooters on the following graph. PRICE (Dollars per scooter) QUANTITY (Scooters) Firms earn zero profit in the long run. Demand Which of the following statements are true for both monopolistically competitive markets and monopoly markets? Check all that apply. Firms are not price takers. Demand O Firms can earn positive profit in the long run. Price is above marginal cost.
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