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Compare the average cost and the output in the long-run equilibrium for a monopolistically competitive firm and a perfectly competitive firm by completing the following table. Under... Average Cost Output (Dollars per football) (Thousands of footballs per month)

Compare the average cost and the output in the long-run equilibrium for a monopolistically competitive firm and a perfectly competitive firm by completing the following table. Under... Average Cost Output (Dollars per football) (Thousands of footballs per month)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Compare the average cost and the output in the long-run equilibrium for a monopolistically competitive firm and a perfectly competitive firm by completing the following table. Under... Monopolistic Competition Perfect Competition Average Cost Output (Dollars per football) (Thousands of footballs per month) Because this market is a monopolistically competitive market, the firm's average cost in long-run equilibrium is average cost it would achieve as a firm operating in a perfectly competitive market. The output of a monopolistically competitive firm in long-run equilibrium is difference in output is known as the the long-run the output of a perfectly competitive firm. This of a monopolistically competitive firm.
Transcribed Image Text:Compare the average cost and the output in the long-run equilibrium for a monopolistically competitive firm and a perfectly competitive firm by completing the following table. Under... Monopolistic Competition Perfect Competition Average Cost Output (Dollars per football) (Thousands of footballs per month) Because this market is a monopolistically competitive market, the firm's average cost in long-run equilibrium is average cost it would achieve as a firm operating in a perfectly competitive market. The output of a monopolistically competitive firm in long-run equilibrium is difference in output is known as the the long-run the output of a perfectly competitive firm. This of a monopolistically competitive firm.
Suppose that a firm produces footballs in a monopolistically competitive market. The following graph shows its demand curve (D), marginal revenue curve (MR), marginal cost curve (MC), and long-run average cost curve (LRAC). Assume that all firms in the industry face the same cost structure. Place the tan point (dash symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place the purple point (diamond symbol) to indicate the point at which this firm would produce in the long run if it operated in a perfectly competitive market. Note: Dashed drop lines will automatically extend to both axes. PRICE, COSTS, AND REVENUE (Dollars per football) 100 90 80 70 60 50 40 30 20 10 0 0 MC LRAC D MR 80 10 20 30 40 50 60 70 QUANTITY (Thousands of footballs per month) 90 100 Monopolistic Competition Outcome Perfect Competition Outcome (?)
Transcribed Image Text:Suppose that a firm produces footballs in a monopolistically competitive market. The following graph shows its demand curve (D), marginal revenue curve (MR), marginal cost curve (MC), and long-run average cost curve (LRAC). Assume that all firms in the industry face the same cost structure. Place the tan point (dash symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place the purple point (diamond symbol) to indicate the point at which this firm would produce in the long run if it operated in a perfectly competitive market. Note: Dashed drop lines will automatically extend to both axes. PRICE, COSTS, AND REVENUE (Dollars per football) 100 90 80 70 60 50 40 30 20 10 0 0 MC LRAC D MR 80 10 20 30 40 50 60 70 QUANTITY (Thousands of footballs per month) 90 100 Monopolistic Competition Outcome Perfect Competition Outcome (?)
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