On the previous graph, use the grey point (star symbol) to show the market price in this case and the quantity produced by each firm. Which of the following statements are true for a typical firm in this market given the transition from monopolistic competition to perfect competition? Check all that apply. The quantity decreases. Profit remains unchanged. Marginal cost decreases. The price decreases. Average total cost remains unchanged.
On the previous graph, use the grey point (star symbol) to show the market price in this case and the quantity produced by each firm. Which of the following statements are true for a typical firm in this market given the transition from monopolistic competition to perfect competition? Check all that apply. The quantity decreases. Profit remains unchanged. Marginal cost decreases. The price decreases. Average total cost remains unchanged.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 11PAE
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![The market for peanut butter in Nutville is monopolistically competitive and in long-run equilibrium.
The following graph shows the marginal-cost (MC) curve and the average-total-cost (ATC) curve for a peanut-butter-producing firm. It also shows the
demand curve and marginal-revenue (MR) curve faced by a firm operating in a monopolistically competitive environment.
On the following graph, use the black point (plus symbol) to show the profit-maximizing output and price for a typical firm operating in a
monopolistically competitive environment.
Price, Cost, Revenue
Demand
MC
ATC
MR
Quantity
Profit Max Under MC
-*
Perfect Comp. Outcome
The quantity decreases.
Profit remains unchanged.
Marginal cost decreases.
The price decreases.
Average total cost remains unchanged.
(?)
One day, consumer advocate Skippy Jif discovers that all brands of peanut butter in Nutville are identical. Thereafter, the market becomes perfectly
competitive and again reaches its long-run equilibrium.
On the previous graph, use the grey point (star symbol) to show the market price in this case and the quantity produced by each firm.
Which of the following statements are true for a typical firm in this market given the transition from monopolistic competition to perfect
competition? Check all that apply.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe26f8a72-d042-4657-88ff-827f5345f762%2Ff10063e1-f2ea-4397-81a3-eddaeb10524f%2F5k4d0he_processed.png&w=3840&q=75)
Transcribed Image Text:The market for peanut butter in Nutville is monopolistically competitive and in long-run equilibrium.
The following graph shows the marginal-cost (MC) curve and the average-total-cost (ATC) curve for a peanut-butter-producing firm. It also shows the
demand curve and marginal-revenue (MR) curve faced by a firm operating in a monopolistically competitive environment.
On the following graph, use the black point (plus symbol) to show the profit-maximizing output and price for a typical firm operating in a
monopolistically competitive environment.
Price, Cost, Revenue
Demand
MC
ATC
MR
Quantity
Profit Max Under MC
-*
Perfect Comp. Outcome
The quantity decreases.
Profit remains unchanged.
Marginal cost decreases.
The price decreases.
Average total cost remains unchanged.
(?)
One day, consumer advocate Skippy Jif discovers that all brands of peanut butter in Nutville are identical. Thereafter, the market becomes perfectly
competitive and again reaches its long-run equilibrium.
On the previous graph, use the grey point (star symbol) to show the market price in this case and the quantity produced by each firm.
Which of the following statements are true for a typical firm in this market given the transition from monopolistic competition to perfect
competition? Check all that apply.
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