ls uccess Tips ■ccess Tips NOUT Actumpto Koup the Highest/3 3. Is monopolistic competition efficient? Suppose that a firm produces baseball bats in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. 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 par bat) 80 70 60 20 MO о о 10 20 40 ATC 60 QUANTITY (Thousands of bas) Demand Man Camp Outcome Min Unit Cost Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that optimal quantity. Furthermore, the quantity the firm produces in long-run equilibrium is average total cost. at the the quantity at which firms minimize True or False: In the long-run equilibrium, a monopolistically competitive firm charges a price equal to marginal cost. True False Grade It Now Save & Continue
ls uccess Tips ■ccess Tips NOUT Actumpto Koup the Highest/3 3. Is monopolistic competition efficient? Suppose that a firm produces baseball bats in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. 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 par bat) 80 70 60 20 MO о о 10 20 40 ATC 60 QUANTITY (Thousands of bas) Demand Man Camp Outcome Min Unit Cost Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that optimal quantity. Furthermore, the quantity the firm produces in long-run equilibrium is average total cost. at the the quantity at which firms minimize True or False: In the long-run equilibrium, a monopolistically competitive firm charges a price equal to marginal cost. True False Grade It Now Save & Continue
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:ls
uccess Tips
■ccess Tips
NOUT
Actumpto
Koup the Highest/3
3. Is monopolistic competition efficient?
Suppose that a firm produces baseball bats in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue
(MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve.
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 par bat)
80
70
60
20
MO
о
о 10 20
40
ATC
60
QUANTITY (Thousands of bas)
Demand
Man Camp Outcome
Min Unit Cost
Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that
optimal quantity. Furthermore, the quantity the firm produces in long-run equilibrium is
average total cost.
at the
the quantity at which firms minimize
True or False: In the long-run equilibrium, a monopolistically competitive firm charges a price equal to marginal cost.
True
False
Grade It Now
Save & Continue
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