Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that at the optimal quantity for each firm. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is the minimum average total cost. True or False: This indicates that there is excess capacity in the market for bats. True False onopolistic competition may also be socially inefficient because there are too many or too few firms in the market. The presence of the externality implies that there is too little entry of new firms in the market.
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- ICE (Dollars per scooter) 3. 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 500 450 400 360 200 250 200 150 400 50 MC- ATC MR Demand 150 200 250 300 360 400 450 500 QUANTITY (Scooters) + Monopolistically Competitive Outcome Profit or Loss (?) Given the profit-maximizing choice of output and price, Citrus Scooters is earning sellers in the industry relative to the long-run equilibrium amount. Now consider the long run in which scooter manufacturers are free to enter and…2. Entry or exit in the long run Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). 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. 500 450 Monopolistically Competitive Outcome 400 350 300 Profit or Loss A ATC 250 200 150 MC 100 50 MR Demand 50 100 150 200 250 300 350 400 450 500 QUANTITY (Bikes) Given the profit-maximizing choice of output and price, the shop is earning profit, which means there are shops in the industry than in long-run equilibrium. PRICE (Dollars per bike)The following graph represents a monopolistically competitive firm in long-run equilibrium. Place the black point (cross sign) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Next, place the grey star on the graph to indicate the point where the LRAC reaches a minimum. PRICE PER UNIT (Dollars) 500 450 400 350 300 250 200 150 100 50 MC 0 0 50 LRAC MR Demand 100 150 200 250 300 350 400 450 500 QUANTITY (Units) Monopolistically Competitive Outcome Minimum of the LRAC The long-run equilibrium price is $ (Hint: Use the graph to find the numeric value of the price at equilibrium.) The long-run equilibrium quantity is units. The LRAC curve is at its minimum at a quantity of The long-run equilibrium price is units. the marginal cost of producing the equilibrium output. ?
- (a) Explain why a monopolistically competitive firm’s profit maximization occurs at the output level when marginal revenue for the firm is equal to its marginal cost. Use a graph to prove your point for a monopolistically competitive firm. (b) What can a monopolistically competitive firm do to try to maintain economic profits?Use the following graph for a monopolistically competitive firm to answer the next question. Dollars (5) 22 32 0 10 20 35 45 50 Quantity of Output (Units) This monopolistically competitive firm is earning economic profits in the short run and ATC Multiple Choice will continue to have economic profits in the long run will earn only normal profits in the long run this will cause its demand curve to shift to the right in the long run. this will cause its cost curves to rise in the long run#3) Draw a diagram of the long run equilibrium in a monopolistically competitive market. How is price related to average total cost? How is price related to marginal cost?
- Microeconomics 2463 Assignment Part 1 - Chapter 15 The market for toothpaste is a monopolistically competitive market. The graph below depicts the demand and marginal revenue curves for this market and the marginal cost and average total cost curves of a monopolistically competitive supplier. Price $10.50 $9.00 $7.50 $6.00 $4.50 $3.00 $1.50 b. Price at the Q in a. c. TR (PxQ) 20 d. TC (ATC x Q) e. Profit (TR-TC) 40 Name MR 60 1 Using the above chart, identify the profit-maximizing quantity of toothpaste that the monopolistically competitive firm should produce, and the per-tube price that it should charge. a. Quantity (chart is in thousands) .MC. ATC: Demand 120 140 80 100 Quantity (thousands of tubes) f. What will happen in this industry in the long-run based on profits in part e? g. What will happen to the demand curve for this particular firm in the long-run based on part f?PRICE (Dolars per bike) 2. How short-run profit or losses induce entry or exit Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demand curve, marginal-revenue (MR) curve, marginal-cost (MC) curve, and average-total-cost (ATC) curve. Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. Now consider the long run in which bike manufacturers are free to enter and exit the market. Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph. 500 400 400 ATC 300 250 200 150 100 Mo Demand 0 ° 50 100 150 200 200 300 350 450 500 QUANTITY (Bikes) Monopolistically Competitive Outcome Profit or Loss Given the…The graph depicts a monopolistically competitive firm. Dollars ($) 90 80 65 55 50 MC 0 ATC MR 10 20 35 45 50 Quantity of Output (Units) Refer to the above graph. This monopolistically competitive firm is: making economic profit in the long run. making economic profit in the short run making a loss in the long run. making a loss in the short run.
- The diagram above represents a monopolistically competitive firm. Answer the questions below. Is this firm operating in the short-run or long-run? How do you know? Calculate this firm’s accounting profit. From the diagram, what is the productively efficient output for this firm? From the diagram, economies of scale are maximized at which output level? Explain. From the diagram, what is the allocatively efficient output for this firm? Explain.9) The Big Top Circus wants to add a death-defying trapeze act to its show. This graph shows the demand and costs for the Flying Squirrels. They are one act of many in a monopolistically competitive market. (See the following diagram.) 10 8.5 5 (Market demand) 250 300 a) At the profit maximizing output level, the firm's profit is: A) $1,200. B) $1,050. C) $750. D) $375. Marginal revenue for firm d) In the long-run we expect the firm to:: Long-run average cost Long-run marginal cost b) In the long-run we expect: A) more firms to enter the market. C) the average cost of production to decrease. B) the firm's demand curve to shift to the right. D) the price of the good to increase. c) At the profit maximizing output level, the is earning a A) positive economic profit and more firms are expected to enter the market. Q B) zero economic profit and no firms are expected to enter the market. C) negative economic profit and more firms are expected to leave the market. D) There is not sufficient…The following table shows the daily cost data and demand schedule for a typical firm producing board games in a monopolistically competitive market in the short run. Fill in the values in the Marginal Cost, Total Revenue, and Marginal Revenue columns in the following table and then answer the questions that follow. Quantity Price (Board games) (Dollars per game) Total Cost Marginal Cost (Dollars) (Dollars) Total Revenue (Dollars) Marginal Revenue (Dollars) Average Total Cost (Dollars) 1 16.00 14.00 10.00 8.00 6.00 4.00 2.00 2 3 4 5 6 7 8 0.50 12 18 21 24 35 48 63 80 Under monopolistic competition, a typical firm will produce Based on your calculations, the firm will Fill in the Average Total Cost column in the previous table. ^^^^^^^ board games at a price of $ Based on your calculations, the level of excess capacity in this monopolistically competitive market is per board game in the short run.