PRICE (Dollars per bike) 2 70 60 50 40 30 20 MC 10 10 ATC Demand MR 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of bikes) Profit 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. Note: Select and drag the curve to the desired position. The curve will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dollars per bike) QUANTITY (Bikes) Demand Demand (?) Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. Assume that Fantastique is operating in the short run. The following graph shows Fantastique's annual demand curve (Demand), marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). Place the grey point (star symbol) on the graph to indicate the profit-maximizing price and quantity for the company. Then determine if the company is experiencing a profit or a loss. If they are experiencing a profit, use the green rectangle (triangle symbols) to shade the area representing the company's profit. However, if they are suffering from a loss, use the purple rectangle (diamond symbols) to shade the area representing the company's loss. Note: Select and drag the rectangles from the palette to the graph. To resize, select one of the points on the rectangle and move to the desired position. PRICE (Dollars per bike) 100 90 80 70 60 ATC 50 40 30 20 20 10 10 MC Demand MR 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of bikes) Mon Comp Outcome Profit 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. Note: Select and drag the curve to the desired position. The curve will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther.
PRICE (Dollars per bike) 2 70 60 50 40 30 20 MC 10 10 ATC Demand MR 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of bikes) Profit 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. Note: Select and drag the curve to the desired position. The curve will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dollars per bike) QUANTITY (Bikes) Demand Demand (?) Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. Assume that Fantastique is operating in the short run. The following graph shows Fantastique's annual demand curve (Demand), marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). Place the grey point (star symbol) on the graph to indicate the profit-maximizing price and quantity for the company. Then determine if the company is experiencing a profit or a loss. If they are experiencing a profit, use the green rectangle (triangle symbols) to shade the area representing the company's profit. However, if they are suffering from a loss, use the purple rectangle (diamond symbols) to shade the area representing the company's loss. Note: Select and drag the rectangles from the palette to the graph. To resize, select one of the points on the rectangle and move to the desired position. PRICE (Dollars per bike) 100 90 80 70 60 ATC 50 40 30 20 20 10 10 MC Demand MR 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of bikes) Mon Comp Outcome Profit 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. Note: Select and drag the curve to the desired position. The curve will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:PRICE (Dollars per bike)
2
70
60
50
40
30
20
MC
10
10
ATC
Demand
MR
0
0
10
20
30
40
50 60 70 80
90 100
QUANTITY (Thousands of bikes)
Profit
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.
Note: Select and drag the curve to the desired position. The curve will snap into position, so if you try to move a curve and it snaps back to its
original position, just drag it a little farther.
PRICE (Dollars per bike)
QUANTITY (Bikes)
Demand
Demand
(?)
Transcribed Image Text:Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. Assume that Fantastique is operating in the short
run.
The following graph shows Fantastique's annual demand curve (Demand), marginal revenue curve (MR), marginal cost curve (MC), and average
total cost curve (ATC).
Place the grey point (star symbol) on the graph to indicate the profit-maximizing price and quantity for the company. Then determine if the company
is experiencing a profit or a loss. If they are experiencing a profit, use the green rectangle (triangle symbols) to shade the area representing the
company's profit. However, if they are suffering from a loss, use the purple rectangle (diamond symbols) to shade the area representing the
company's loss.
Note: Select and drag the rectangles from the palette to the graph. To resize, select one of the points on the rectangle and move to the desired
position.
PRICE (Dollars per bike)
100
90
80
70
60
ATC
50
40
30
20
20
10
10
MC
Demand
MR
0
0
10
20
30
40
50
60
70
80 90 100
QUANTITY (Thousands of bikes)
Mon Comp Outcome
Profit
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.
Note: Select and drag the curve to the desired position. The curve will snap into position, so if you try to move a curve and it snaps back to its
original position, just drag it a little farther.
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