How short-run profit or losses induce entry or exitFantastique Bikes is a company that manufactures bikesin a monopolistically competitive market. The followinggraph shows Fantastique's demand curve, marginalrevenue curve (MR), marginal cost curve (MC), andaverage total cost curve (ATC).2. How short-run profit or losses induce entry or exitFantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demandcurve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC).Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitivecompany. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss500400350300ATC250*200150100MOMR4505030PRICE (Dollars per l0DemandA0 50 100 150 200 250 300 350 400 450 500QUANTITY (Bikes)Given the profit-maximizing choice of output and price, the shop is making+Monopolistically Competitive Outcome✰✰Proft or Lossshops in the industry relative to the long-run equilibrium.QUANTITY (Bikes)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.Demandprofit, which means there areDemand Which of the following statements are true about both monopolistic competition and monopolies? Check all that apply.Firms are not price takers.Firms can earn positive profit in the long run.Firms earn zero profit in the long run.Price is above marginal cost.

Marginal revenue is a central concept in microeconomics that describes the additional total revenue…

Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss

Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The following graph represents a monopolistically competitive firm in long-run equilibrium. Place the black point (cross sign) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Next, place the grey star on the graph to indicate the point where the LRAC reaches a minimum. PRICE PER UNIT (Dollars) 500 450 400 350 300 250 200 150 100 50 MC 0 0 50 LRAC MR Demand 100 150 200 250 300 350 400 450 500 QUANTITY (Units) Monopolistically Competitive Outcome Minimum of the LRAC The long-run equilibrium price is $ (Hint: Use the graph to find the numeric value of the price at equilibrium.) The long-run equilibrium quantity is units. The LRAC curve is at its minimum at a quantity of The long-run equilibrium price is units. the marginal cost of producing the equilibrium output. ?
The accompanying graph depicts average total cost (ATC), marginal cost (MC), marginal revenue (M), and demand (D) facing a monopolistically competitive firm. 50 MC Place point A at the firm's profit maximizing price and 45 quantity. 40 What is the firm's total cost? 35 30 ATC 25 total cost: $ 20 D 15 10 What is the firm's total revenue? MR 05 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100 Quantity total revenue: $ What is the firm's total profit? profit: $ Price and Cost ($)
The graph to the right depicts the demand for caffe lattes at a local coffeehouse along with the average total cost and marginal cost of producing lattes. Suppose the coffeehouse is in a monopolistically competitive market in the short run. How many caffe lattes should this coffeehouse produce to maximize profits? units. (Enter a numeric response using an integer.) MC What is the corresponding profit-maximizing price? $ per latte. (Enter a numeric response using a real number rounded to two decimal places.) g 3.2아 을 2.901 АТС Calculate the coffeehouse's profits on caffe lattes. $. (Enter a numeric response using a real number rounded to two decimal places.) 응 2.42 … . 2.00 MR D 38 95 Quantity of caffe lattes (per day) Price and cost (dollars per cup)
Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. Note: Dashed drop lines will automatically extend to both axes. 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) 500 450 400 350 PRICE (Dollars per bike) 300 250 200 150 100 50 0 0 MC + 50 100 AC MR 150 200 250 300 350 400 450 500 QUANTITY (Bikes) Demand Enjano Given the profit-maximizing choice of output and price, the shop is earning shops in the industry than in long-run equilibrium. + Monopolistically Competitive Outcome Now consider the long run in which bike manufacturers are free to enter and exit the market. QUANTITY (Bikes) Show the possible effect of free entry and exit by shifting the…
Monopolistic competition creates inefficiency because of the markups and excess capacity. The graph below depicts the situation for a hypothetical monopolistically competitive firm. The curves included in the graph are demand (D), marginal revenue (MR), average total cost (ATC), and marginal cost (MC). The graph is not graded, but you can move the point labeled P to help you find the numeric values to answer the questions. Price $ 80 MC M 45 P D ATC Quantity What is the size of the markup on the price? Number $0 What is the size of the excess capacity? Number Units
A decrease in the number of competitors in a monopolistically competitive market causes an increase in the price elasticity of demand for the output of each of the remaining firms in the market.
Suppose the accompanying graph depicts a monopolistically competitive firm earning positive economic profits. Please shift the curves to show the effects of long-run competition and then place Point A at the price and quantity at which the firm will produce in the long-run.
The graph shows the short-run cost, revenue, and perceived demand curves for all firms in the convenience store market, which is a monopolistically competitive market. Price ($) Marginal cost Number of firms will remain the same. Number of firms will decrease to one firm. Number of firms will increase. Number of firms will decrease. Demand Quantity What will happen to the number of firms in the industry as it moves from the short run to the long run? Average cost Marginal revenue
What does the skimming price strategy allow a company to do? quickly attract the entire market quickly test out the product quickly earn back its investment
What are the “monopolistic” and the “competitive” elements of monopolistic competition?Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click twice to empty the box.Similar to a monopoly, a monopolistic competitor: can restrict output to increase price (at least in the short run).checked can make profits or losses in the short run.unanswered faces a downward-sloping demand curve.unanswered faces high barriers to entry.unanswered makes economic profits in the long run.unanswered produces where P > MR = MC.unanswered has one seller.unanswered Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click twice to empty the box.Similar to a perfect competitor, a monopolistic competitor: faces a perfectly elastic demand…
Assume the figure on the right shows the cost structure for a monopolistically competitive firm selling a particular brand of shoes. MC is the marginal cost curve and AC is the average cost curve. If this firm produces 2 thousand pairs of shoes, does it minimize average cost? How much more would they need to produce to reach minimum average cost? The firm needs to produce an additional thousand pairs of shoes to reach minimum average cost. (Enter your response as an integer.) SEED Price (dollars per pair) 80- 72- 64- 56- 48- 40- 32- 24- 16- 8- 0- 0 1 Quantity (in thousands) MC AG 10 Q 20
Suppose the figure to the right represents the market for a particular brand of shampoo, such as L'Oreal, Lancome, or Maybelline. Assume the market is monopolistically competitive and is in long-run equilibrium. How much excess capacity does the firm have? The monopolistically competitive firm's excess capacity is thousand bottles of shampoo. (Enter your response as an integer.) C Price and cost (per bottle) 2.00- Q 1.80- MC Q ATC 1.60- 1.40- 1.20- 1.00- 0.80- 0.60- 0.40- 0.20- 0.00+ 0 2 MR D 4 6 8 10 12 14 16 18 20 Quantity (shampoo bottles in thousands)