Because this market is monopolistically competitive, you can tell that it is in long-run equilibrium by the fact that firm. Further, a monopolistically competitive firm's average total cost in long-run equilibrium is True or False: This indicates that there is excess capacity in the market for razors. O True the O False at the optimal quantity for each the minimum average total cost. Monopolistically competitive markets may be socially inefficient due to the presence of too many or too few firms. The presence of externality implies that there is too much entry of new firms in the market.
Because this market is monopolistically competitive, you can tell that it is in long-run equilibrium by the fact that firm. Further, a monopolistically competitive firm's average total cost in long-run equilibrium is True or False: This indicates that there is excess capacity in the market for razors. O True the O False at the optimal quantity for each the minimum average total cost. Monopolistically competitive markets may be socially inefficient due to the presence of too many or too few firms. The presence of externality implies that there is too much entry of new firms in the market.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Because this market is monopolistically competitive, you can tell that it is in long-run equilibrium by the fact that
firm. Further, a monopolistically competitive firm's average total cost in long-run equilibrium is
True or False: This indicates that there is excess capacity in the market for razors.
True
the
False
at the optimal quantity for each
the minimum average total cost.
Monopolistically competitive markets may be socially inefficient due to the presence of too many or too few firms. The presence of
externality implies that there is too much entry of new firms in the market.
Transcribed Image Text:4. Is monopolistic competition efficient?
Suppose that a company operates in the monopolistically competitive market for electric razors. 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 razor)
100
90
80
70
60
50
40
30
20
10
0
MC
0 10
ATC
MR
20 30 40 50 60 70
QUANTITY (Thousands of razors)
80
Demand
90 100
+
1.
Mon Comp Outcome
Min Unit Cost
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