Answer the questions based on the following graph that shows the cost and revenue curves of a monopolistically competitive firm operating in the Toy Bear industry. S 10 9 8 7 6 5 2 1 0 2 لا A 4 5 Quantity MR MC ATC Demand 6 7 8 9 10 (a) Is the firm whose cost and revenue curves shown above in short-run equilibrium? Explain. (b) Using the labeling from the graph, identify each of the following at the profit-maximizing output. (i) The average total cost (ii) The output produced (c) Using the labeling from the graph, identify each of the following if this were a profit- maximizing perfectly competitive firm. (i) The average total cost
Answer the questions based on the following graph that shows the cost and revenue curves of a monopolistically competitive firm operating in the Toy Bear industry. S 10 9 8 7 6 5 2 1 0 2 لا A 4 5 Quantity MR MC ATC Demand 6 7 8 9 10 (a) Is the firm whose cost and revenue curves shown above in short-run equilibrium? Explain. (b) Using the labeling from the graph, identify each of the following at the profit-maximizing output. (i) The average total cost (ii) The output produced (c) Using the labeling from the graph, identify each of the following if this were a profit- maximizing perfectly competitive firm. (i) The average total cost
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Answer the questions based on the following graph that shows the cost and revenue curves of
a monopolistically competitive firm operating in the Toy Bear industry.
10
9
8
7
6
S 5
4
3
2
1
0
0
1
2
3
A
MR
4
5
Quantity
6
7
MC
ATC
Demand
8 9 10
(a) Is the firm whose cost and revenue curves shown above in short-run equilibrium? Explain.
(b) Using the labeling from the graph, identify each of the following at the profit-maximizing
output.
(i) The average total cost
(ii) The output produced
(c) Using the labeling from the graph, identify each of the following if this were a profit-
maximizing perfectly competitive firm.
(i) The average total cost
Time
Attem
59 M
Transcribed Image Text:ts
(c) Using the labeling from the graph, identify each of the following if this were a profit-
maximizing perfectly competitive firm.
(i) The average total cost
(ii) The output produced
(d) Using the labeling from the graph, identify each of the following:
(i) the excess capacity that exists in this market.
(ii) the mark-up on marginal cost.
Bonus Question:
Calculate the deadweight loss caused by the monopolistically competitive firm.
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