Mike's a firm in monopolistic competition, produces bikes. With no advertising, Mike's profit-maximizing output is 500 bikes a day and the price is $100 a bike. The graph shows Mike's demand curve, marginal revenue curve, marginal cost curve, and average total cost curve with no advertising Now all firms begin to advertise With advertising, Mike's maximizes profit by producing more than 500 bikes a day and charging less than $100 a bike. How does advertising change Mike's markup and excess capacity? Mike's markup Mike's excess capacity CEZANN when it advertises. when it advertises. OA. is larger, does not change OB. does not change; does not change OC. does not change; is smaller OD. is larger, is larger OE. is smaller, is smaller 175 75- 50- 25- Price and opel alias per bike) ATC 0 100 200 300 400 500 600 700 800 900 10 Quantity (bikes per day)

Mike's a firm in monopolistic competition, produces bikes. With no advertising, Mike's profit-maximizing output is 500 bikes a day and the price is $100 a bike. The graph shows Mike's demand curve, marginal revenue curve, marginal cost curve, and average total cost curve with no advertising Now all firms begin to advertise With advertising, Mike's maximizes profit by producing more than 500 bikes a day and charging less than $100 a bike. How does advertising change Mike's markup and excess capacity? Mike's markup Mike's excess capacity CEZANN when it advertises. when it advertises. OA. is larger, does not change OB. does not change; does not change OC. does not change; is smaller OD. is larger, is larger OE. is smaller, is smaller 175 75- 50- 25- Price and opel alias per bike) ATC 0 100 200 300 400 500 600 700 800 900 10 Quantity (bikes per day)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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